Turkey and the EU

Baroness Hooper: asked Her Majesty's Government:
	What is their view on Turkey's application for membership of the European Union.

Lord Triesman: My Lords, the Government remain strongly in support of Turkey's bid to join the EU. Turkey is an important strategic partner, a NATO ally and a major market for exporters. A stable, democratic and prosperous Turkey anchored in the EU would be an enormous prize, and a powerful demonstration that Islam, democracy and economic success are compatible.
	We look forward to opening accession negotiations with Turkey on 3 October of this year, as agreed by the European Council in December 2004 and subsequently reaffirmed by the June European Council.

Baroness Hooper: My Lords, in thanking the Minister for his most helpful and positive reply, I ask him to urge his right honourable friend the Minister for Europe and, indeed, his right honourable friend the Foreign Secretary to continue to support Turkey's application for membership of the European Union on the basis, as he has said, that Turkey provides an important, if not unique, secular democratic system of government as an example in the Middle East, and also on the basis that Turkey was a founder member of the Council of Europe in 1949, as, indeed, were we, and continues to play an important and active role especially in the parliamentary assembly.

Lord Triesman: My Lords, I agree with the noble Baroness, Lady Hooper. It is an important objective of our EU presidency to drive this process forward through the successful launch of the accession negotiations. I am confident that the historical track record should give us good prospects of bringing that to a very successful conclusion.

Lord Judd: My Lords, given the Government's firm and robust statement about their position on Turkey, does my noble friend not agree that to close the door on Turkey at this juncture would be disastrous in terms of playing into the hands of those who seek a confrontation between the Islamic and non-Islamic worlds?

Lord Triesman: My Lords, every opportunity that we can take constructively to build bridges between the nations and the great faith communities of Islam and of the rest of Europe must be taken. I would hope that our partners across Europe, whatever their cultural and religious traditions, will see the merit of that argument. There could be no more strategically placed nation with which to build that relationship.

Baroness Cox: My Lords, I appreciate all that the Minister has said, particularly the importance of building bridges, but is he aware that Turkey is maintaining an illegal blockade of its border with Armenia, and that that is the only remaining closed border in Europe? Will Her Majesty's Government therefore support the proposal that one of the preconditions for Turkey's entry to the European Union should be the opening of that border, because that would enhance economic development and prosperity for both nations, and increase peace and stability throughout the region?

Lord Triesman: My Lords, improved bilateral relations with Armenia were not a condition for opening negotiations with Turkey. The December decision was based on whether Turkey had met the Copenhagen political criteria. The European Council conclusions welcomed the improvements that Turkey was showing with its neighbours. It is very important to ensure that those improvements continue on a trajectory to a successful conclusion, but the more preconditions that are set, the less likely it is that the negotiations will resolve those questions. They are matters for serious negotiation. Some have said that the negotiations will be the toughest for any accession country, at any time, and that is probably rightly so. Let us get into the process on that basis.

Lord Wallace of Saltaire: My Lords, given that the noble Baroness has just assumed that Armenia is a European country and therefore, I assume, a potential candidate, do the Government have a view about further enlargement? The governments of Ukraine and Georgia are very actively announcing their European vocation. The government of Georgia now fly the European flag alongside their own. Do the Government yet take a settled view about how much further we go?

Lord Triesman: My Lords, we have major negotiations with Turkey and with other countries much closer to accession. That is probably the realistic perspective for the next period. We are temperamentally inclined to the idea of enlarging the European Community because of the stability and economic prosperity that it brings. However, we would be unwise to bite off more than we can chew at the moment.

Lord Howell of Guildford: My Lords—

Lord Wright of Richmond: My Lords—

Lord Rooker: My Lords, I think that we should hear from the noble Lord, Lord Wright.

Lord Wright of Richmond: My Lords, what do the Government propose to do in the light of speculation that the "No" votes of the Dutch and French people were partly stimulated by opposition to Turkish accession to the European Union, and the reported views of Frau Angela Merkel in Germany that there is a risk that Turkish public opinion will become less and less enthusiastic about joining the European Union?

Lord Triesman: My Lords, the noble Lord, Lord Wright, raises a very important question. I wanted to be clear about the way in which the "No" votes in both the Netherlands and France had been generated. I have concluded that it would be wrong to overstate the extent to which fear of enlargement contributed to either of those votes. A good deal of post-referenda polling, including the Eurobarometer poll, suggests that it was important to 3 per cent of Dutch voters—if I can put it the other way round, it was not important to 97 per cent—and 6 per cent of French voters. They regarded Turkey as the predominant issue, but plainly it is not so for large parts of those populations. Were we to overstate its predominance, we would prejudice, as the noble Lord has suggested, discussions that could take a much more positive character if we got these matters in the right proportion.

Lord Howell of Guildford: My Lords, is the Minister aware that his robust views on Turkish membership are extremely welcome, as is his excellent analysis of continental opinion? But does he agree that one of the problems that used to be cited about Turkish membership was the question of Cyprus? Yet, nowadays, it is less a question of northern Cyprus and the Turkish Cypriots than of the doubts and difficulties on the Greek Cypriot side that seem to have provided an obstacle to further development in that area? Will the British Government do all that they can to encourage the Greek Cypriots to follow the initiative that the Turkish Cypriots and Turkey have taken in resolving that problem?

Lord Triesman: My Lords, I agree with the noble Lord. We are doing what we can to re-establish new settlement talks in Cyprus, although they will be initiated successfully only if there is support from both communities. We should use our influence exactly as has been suggested to do that. We welcome the recent fact-finding mission to the region by Sir Kieran Prendergast, the UN Under-Secretary-General for Political Affairs. His report to the Security Council concluded that the gap between the stated positions of the parties, unfortunately at present, appears to be widening while the confidence between them is not high. For those reasons, the work that has just been suggested is very important.

Cannabis

Lord Waddington: asked Her Majesty's Government:
	What plans they have to reclassify cannabis; and what is the time-scale for any review.

Baroness Scotland of Asthal: My Lords, Her Majesty's Government have requested the Advisory Council on the Misuse of Drugs to conduct a full review of the links and associations between taking cannabis and developing mental health problems. The advisory council has been specifically asked to assess whether the emerging evidence changes its overall assessment. We expect its recommendation by the end of the year.

Lord Waddington: My Lords, I thank the noble Baroness for her helpful reply. But is it not now established, courtesy of the Freedom of Information Act, that some months before the order making cannabis a class C drug went through this House, the Prime Minister was warned by his strategy adviser, the noble Lord, Lord Birt, that cannabis leads to long-term mental damage and was responsible at that time for more mental health emergency hospital admissions than crack cocaine? Would it not have been better if we had been told that at the time when we were debating that order?
	Secondly, since the order, have not new studies in Holland and New Zealand reinforced the link between cannabis and mental illness? Should not the Government, as a matter of urgency, reclassify the drug, which would at least remove the impression that it is no more dangerous than tranquillisers or steroids?

Baroness Scotland of Asthal: My Lords, as the noble Lord, Lord Waddington, will know, the Government—and it is right that we should do so—place heavy reliance on the advisory council and its recommendations. That is the very purpose for which it was set up. It is an expert body, which looked at all the reports and gave advice to Her Majesty's Government—advice that we have taken very seriously. The advisory council has said that it will look at this matter again, and it will do so. Once we have its report, I assure the noble Lord and this House that we will give it the most careful scrutiny.

Lord Tomlinson: My Lords, is my noble friend aware that when the decision was made to downgrade the classification of cannabis, it was a dangerous decision that was made on the basis of, at that time, poor evidence, inadequate preparation, bad scientific analysis and seriously mixed messages to the public? Against that background her statement today is very welcome.

Baroness Scotland of Asthal: My Lords, of course I hear what my noble friend says in relation to that. I say, with the greatest respect to him, that we cannot agree with it. The ACMD's view was well set out and very cogently argued. A number of people, not least the noble Lord, Lord Waddington, brought to our attention the more recent reports. As the noble Lord will remember, we asked for advice from the council, which it gave. I know that this is an issue on which many people feel very strongly, but we have to allow the expert opinion to be heard. Then, of course, we will act.

Baroness Seccombe: My Lords, have the conviction rates for class A and B drugs increased since the reclassification of cannabis? If so, can she give us any statistics on them?

Baroness Scotland of Asthal: My Lords, I can certainly tell the noble Baroness that drug-related crime rates are falling. Acquisitive crime, to which drug-related crime contributes a significant proportion, fell by 13 per cent in the year to April 2005. In that month, over 1,950 drug misusing offenders entered treatment through the Drug Interventions Programme. Substantial reductions have been made in the level of self-reported commissions of acquisitive crimes. All the figures indicate that we are able to deal more aggressively and more assertively with drug-related crime than was the case in the past. It is clear that we have been able to focus on those actions which make a difference. I am happy to provide further details. For example, BCS data for 2004 show that in the 16–24 year-old age group we are doing much better.

Lord Peyton of Yeovil: My Lords—

Noble Lords: The Liberal Democrat Benches!

Lord Dholakia: My Lords, I thank the Minister for her assurance that this matter is being looked at by the Advisory Council on the Misuse of Drugs. When considering the issue of reclassification, will she take into account three other factors aside from those she has already mentioned? First, arrests for the possession of cannabis have dropped by one third. Secondly, the estimated saving in police time has now amounted to over 200,000 hours. Thirdly, and most important, the level of cannabis use by young people has remained stable.

Baroness Scotland of Asthal: My Lords, all those factors will properly be taken into account. The noble Lord is right to refer to them. We have been able to concentrate on those who deal as opposed to those who simply use. Thankfully, the number of drug interdictions has increased, and we are doing far better than was the case in the past in terms of such interdiction. The latest published figures covering 2003–04 show that over 100 tonnes of class A drugs were seized by CIDA agencies, along with £25.6 million-worth of drug-related criminal assets, thus depriving dealers of their financial life blood. So we are doing good work.

Lord Peyton of Yeovil: My Lords—

Lord Chan: My Lords—

Lord Rooker: My Lords, it is the turn of the Cross Benches.

Lord Chan: My Lords, will the review of the use of cannabis also include its medical uses, particularly in palliative care?

Baroness Scotland of Asthal: My Lords, the noble Lord will know that the use of cannabis in palliative care has been looked at, and that continues to be the case.

Lord Peyton of Yeovil: My Lords, does not the noble Baroness agree—

Baroness Amos: My Lords, it is time for the next Question.

Noble Lords: Oh!

Baroness Amos: My Lords, we are in the sixteenth minute.

Baroness Hooper: My Lords, as a point of information, is this House not self-regulating? Is it therefore not appropriate for the Front Bench on either side to intervene in the Business of the House?

Baroness Amos: My Lords, yes, it is. Would the Front Bench on the other side care to intervene? Since no one has risen to speak, I do not understand the point being made by the noble Baroness.

Earl Ferrers: My Lords, perhaps I may assist the noble Baroness. She has said that she does not understand the point. The point is that my noble friend Lord Peyton has tried to speak on three occasions, and the clock indicated the fifteenth minute. Usually one would be allowed a little movement on that.

Baroness Amos: My Lords, as the House knows, when the clock indicates the fifteenth minute, we are in the sixteenth minute.

Lord Peyton of Yeovil: My Lords—

Lord Strathclyde: My Lords, I support the Leader of the House. We should move on to the next Question and deal with this matter at another time.

Identity Cards: Cost

Lord Lyell: asked Her Majesty's Government:
	What is their current estimate of the cost of the identity card scheme.

Baroness Scotland of Asthal: My Lords, the current best estimate of the average annual operating costs of issuing biometric passports and ID cards to UK nationals and operating identity verification services is £584 million, which was published on 25 May. Around 70 per cent of these costs will be incurred by issuing biometric passports, which we will have to do to keep our passports secure.

Lord Lyell: My Lords, I am extremely grateful to the noble Baroness for that reply. However, if someone of my age does not want to renew a passport but does want a card, how much will it cost, and how will the shortfall between what everyone is paying and the total cost of the cards—£584 million as of last Wednesday—be covered?

Baroness Scotland of Asthal: My Lords, I am delighted to have the opportunity to answer the noble Lord's Question, as I will the next Question—just to reassure noble Lords that I will be here for a while.
	The figure, as I said, will be made up primarily—70 per cent—from biometric passports. Concessions for age or lack of ability to pay will be considered nearer the time.

Lord Marlesford: My Lords, does the Minister understand why someone such as me, who is fully in support of having foolproof biometric identity cards for the 50 million-plus people in this country, has absolutely no confidence in the capability of the Home Office to introduce it? That is for the simple reason that, after the seven years since Parliament required it, the Home Office has not even succeeded in introducing the electronic register of firearm certificates for a few hundred thousand people.

Baroness Scotland of Asthal: My Lords, I know why the noble Lord has a particular anxiety in that regard, but I reassure him that the Passport Office, in its new form, will be responsible for dealing with identity cards. It has an exemplary record. It produces and delivers a very high quality service. I hear noble Lords opposite saying that they do not believe it, but I invite them to remember that the Passport Office is the only organisation that has now received two international awards for its superb service.

Viscount Montgomery of Alamein: My Lords, is the noble Baroness aware that I am one of the few people in this place who volunteered to be a guinea pig in the identity card scheme? I think that they are a very good thing.

Baroness Scotland of Asthal: My Lords, I wholeheartedly thank the noble Viscount for that most helpful and erudite intervention.

Lord Dholakia: Will the Minister thank the Home Secretary, who has confirmed that the introduction of ID cards would have done nothing to stop the terrorist attack last week in London? However, has she had an opportunity to revisit and reconsider the London School of Economics report on the costing of ID cards? Will she now confirm that the estimate given by the LSE is correct? If those estimates were converted into police officer appointments, how many new police officers could we employ?

Baroness Scotland of Asthal: My Lords, we do not accept the LSE figures; we have had the opportunity to consider them. Our figures are robust and are based on our data from operations that have been undertaken before. A number of the premises on which the LSE appears to have founded its assessment appear to be flawed. I will make a full response in due course, but that is certainly our initial view.
	I can also confirm that we do not suggest that ID cards of themselves would have stopped what happened so terribly on the 7th. What we say—and it is confirmed by our colleagues in Madrid and elsewhere—is that identity cards are a very valuable tool and can certainly assist us in relation to false identity. I remind the House that we do not yet know whether false identity played a part in that most disgraceful incident.

Lord Davies of Coity: My Lords, is my noble friend aware of the poll reported in the Times today that shows that an astonishing majority of the British people wants ID cards?

Baroness Scotland of Asthal: My Lords, I am aware that the figure is high. In fact, the preliminary findings of a Taylor Nelson Sofres survey were published on 27 June this year and found that 70 per cent of citizens were willing to apply for a combined passport and ID card while fully understanding the personal investment they would need to make in terms of price, and 73 per cent support the Government's proposal to introduce an identity card scheme.

Lord Kilclooney: My Lords, as citizens of the Republic of Ireland have freedom of access into the United Kingdom and freedom of movement within it, can the Minister comment on press reports that Her Majesty's Government are now in discussions with the Dublin Government to have ID cards introduced into the Republic of Ireland as well?

Baroness Scotland of Asthal: My Lords, I cannot comment on that. I hear what the noble Lord says. If there is information about it, I am afraid that I do not have it.

Asylum Seekers: Repatriation

Baroness Park of Monmouth: asked Her Majesty's Government:
	What action they will take to implement the Evian agreement reached by G5 interior Ministers to organise charter flights to repatriate failed asylum seekers.

Baroness Scotland of Asthal: My Lords, G5 and EU member states have been working for some time now with one another on bilateral and trilateral joint removals operations involving charter flights. The United Kingdom has worked previously with France, the Netherlands and Spain and will continue to make case-by-case decisions on participation in proposed joint operations where we are satisfied that arrangements are sufficient and appropriate. We strongly believe that joint co-operation is the most successful way to tackle illegal immigration and increase removals.

Baroness Park of Monmouth: My Lords, I submit that this is not solely a Home Office issue. Until there has been a political reassessment of the situation in Zimbabwe in the light of the UN report which is expected, will Her Majesty's Government confirm that no action, even after 4 August, will be taken without a review of the policy by Parliament to deport failed Zimbabwe asylum seekers, including under the proposed EU charter arrangement? Many of these cases demand reassessment in any case. Presumably the charter agreement has been reached partly for reasons of cost but also partly because the scheduled airlines may now refuse to take people forcibly repatriated under guard and handed over to the CIO in Zimbabwe. Her Majesty's Government cannot simultaneously recognise, as they did at the G8, that there is no rule of law in Zimbabwe and send back those seeking political asylum. They do not do that to the inhabitants of Belmarsh prison.

Baroness Scotland of Asthal: My Lords, I know the acute concern that has been expressed repeatedly in the House in relation to Zimbabwe. I can reassure the noble Baroness that before any individual is returned to Zimbabwe a most careful assessment is made of whether it is appropriate so to do. In relation to charter flights, the noble Baroness will know that before a charter flight is entered into arrangements usually have to be made by the receiving state so that appropriate provisions are put in place. There are no such arrangements with Zimbabwe.

Baroness Williams of Crosby: My Lords, on 27 June the noble Baroness told the House that 95 Zimbabweans had been removed from this country in the first quarter of this year. Can she tell the House what proportion of those who had claimed asylum in this country were returned to Zimbabwe? Secondly, can she explain why the proportion of Zimbabwean asylum seekers offered either temporary leave to remain or the right to remain in this country has dropped from seven in 10 in 2004 to one in seven in the first quarter of this year? Does the explanation lie in the obvious improvement of the situation in Zimbabwe?

Baroness Scotland of Asthal: My Lords, if I may respectfully say to the noble Baroness, this is very wide of the mark. I shall be very happy to write to the noble Baroness, particularly bearing in mind the detailed nature of her question.

Lord Elton: My Lords, the last sentence of the noble Baroness's answer to my noble friend Lady Park implied that it would be impossible under present law to compulsorily return Zimbabwean refugees in this country. Is it not the case, however, that a significant number of Zimbabwean citizens have got out of that country by acquiring travel documents from a third country? Is it the case that such refugees will be returned to the third country, from which they can expect to be very rapidly returned to Zimbabwe?

Baroness Scotland of Asthal: My Lords, this question, too, is very wide of the mark. I remind the noble Lord that for every applicant who seeks asylum in this country a proper process, which involves an appeal process, is gone through to ascertain whether they have the right to remain in this country, whether under the 1951 convention or other rights.

Lord Alton of Liverpool: My Lords, does the noble Baroness the Minister accept that the original Question concerned the repatriation of failed asylum seekers? In the light of the deteriorating situation in Zimbabwe and the removal of nearly 100,000 people at least from their homes, bulldozed by Robert Mugabe's forces, can the Minister tell the House whether those new circumstances have now been taken into account in reassessing the return of asylum seekers to Zimbabwe and all the security, safety and human rights issues they would face if they were now returned.

Baroness Scotland of Asthal: My Lords, I regret that I have to repeat that this is not a Zimbabwe Question; it is a Question about returns. I have made absolutely clear on a number of occasions that Her Majesty's Government—both the Foreign Office and the Home Office—will continue to review the position in Zimbabwe.

Baroness D'Souza: My Lords, is the Minister aware that a number of the asylum seekers who have been returned to Zimbabwe have been tortured, and that there is now sufficient evidence to show that that is the case?

Baroness Scotland of Asthal: No, my Lords, I am not so aware. On the last occasion that I answered a Zimbabwe Question I made it absolutely clear that if any noble Lords—or indeed any individuals—had any details of cases we would be very happy to investigate them. However, that too is wide of the Question. I am happy to answer any question in relation to that which has been asked.

Lord Dholakia: My Lords, when such charter flights are operating, will the Minister obtain categoric assurance from the country to which people are being deported that they will come to no harm whatever?

Baroness Scotland of Asthal: My Lords, your Lordships know that, in relation to returns, matters that will be looked at are: first, whether it is a safe country to return that person to; secondly, whether they are in any danger in terms of the rights that have already been gone into. All the provisions that this House and the other place agonised over to make sure that our immigration and asylum legislation was robust remain in place and undiminished.

Lord Avebury: My Lords, is the Minister aware that in the case of many people who would be liable to such returns, including Zimbabweans, they have exhausted their rights to legal aid because of the severe limits on legal aid allowed by the Government? They have enormous difficulties in getting bail and are frequently shifted gratuitously from one detention centre to another making it impossible for their legal advisers—if they are lucky enough to have one—to give them proper advice?

Baroness Scotland of Asthal: My Lords, I say, I hope for the last time, that the Home Secretary made the Government's policy on returning failed asylum seekers clear in his Statement on 27 June and in a Written Ministerial Statement on 6 July. The policy remains unchanged following the comments on 6 July of Mr Justice Collins. We are not able to have a running commentary on removals, on individual cases or on these issues.

Racial and Religious Hatred Bill

Brought from the Commons; read a first time, and ordered to be printed.

Business of the House: Grand Committee Motions

Baroness Amos: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
	Moved, That leave be given for the seven Motions set down for today referring instruments to a Grand Committee to be moved en bloc.—(Baroness Amos.)

Lord Tebbit: My Lords, before the House gives its consent to the noble Baroness's Motion, I wonder whether she would be kind enough—recognising that dealing with the Motions in this way is for the convenience of the Government as much as the House—to make an effort to understand the question put by my noble friend Lord Ferrers, since she said that she did not understand it. I think that she ought to understand it.

Baroness Amos: My Lords, I said that I did not understand the question from the noble Baroness regarding the issue of the Front Bench. I did not make a response to the question from the noble Earl, Lord Ferrers, apart from making it clear that we had moved into the sixteenth minute.

Lord Tebbit: My Lords, the noble Baroness is quite wrong. We had not moved into the sixteenth minute. The question that my noble friend was trying to ask was on the second Question, I think. I suggest that it has not been the custom of this House that the time should be exactly apportioned equally between each Question. There are some Questions that the House seems to want to debate longer than others, and there are Questions to which Ministers' replies seem to be uttered with an eye on the clock rather than on the merits of the Question or the Answer.
	I think that it is time that the noble Baroness gave a little thought to the way in which Question Time these days is often spoiled by very long questions and very long answers from people who are simply playing for time. That is a criticism of both the Back and Front Benches, and particularly of Ministers in this House.

Baroness Amos: My Lords, the noble Lord is quite right. There are times when questions are very long and when answers are very long. I try to exercise a degree of judgment. This is a matter that I have raised with my Front-Bench colleagues, and I know that the matter has been raised at the party meetings of each of the Benches in this House. However, I must tell the noble Lord that the House cannot, on the one hand, ask me to exercise a degree of discipline at Question Time but, on the other hand, object to what I generally do when the clock reaches fifteen minutes, which is to move on to the third Question. At that point, I have no idea what the feeling of the House will be in relation to the two Questions remaining on the Order Paper.
	That is the reality. Sometimes the mood of the House may be slightly different; at other times, it is not. I also have an eye on the number of questions that have been asked by individuals on different Benches in the House to try to ensure that there is a degree of fair distribution. There are times when that is also challenged. I accept that this is not an exact science but, given that the House has been absolutely clear about its wish to self-regulate and its wish that I and my colleagues on the Front Bench should exercise a role in that, that is what we seek to do.

Lord Phillips of Sudbury: My Lords, with regard to the eight statutory instruments that the Leader of the House has put before the House—

Noble Lords: Seven!

Lord Phillips of Sudbury: My Lords, seven. Is that an unusual circumstance? I cannot remember seven statutory instruments being put into Grand Committee at once before. Is that a portent of things to come? If it is, it is a major issue, given that secondary legislation already gets very short shrift.

Baroness Amos: My Lords, the noble Lord may recall that this issue was discussed at the Procedure Committee before a report was made to this House and agreed to. A number of statutory instruments have been put into Grand Committee, but they still then have to be agreed on the Floor of the House. The intention, of course, is to ensure that there is enough time for debate and discussion.

Lord Strathclyde: My Lords, I return briefly to the subject raised by my noble friend Lord Tebbit. I intervened earlier on to support the case that we should move on to the next Question at that time and not debate that issue during the course of the 30 minutes. However, my noble friend was entirely right to raise the issue now—this is the time.
	From my point of view, I think that the noble Baroness was uncharacteristically unfriendly to my noble friend Lord Peyton. He had tried to ask his question several times and it would have been generous to allow him to continue it. However, I support the view that self-regulation in this House is extremely important; all of us vest in the Leader of the House an authority to urge the House to move on when it gets into a state at Question Time—and on this occasion, that is what she did. We are about to debate far wider issues relating to the role of discipline, self-regulation, the Speakership and the role of the Leader, but I just register again my disappointment that on this occasion my noble friend Lord Peyton was not asked to put his question.

Baroness Amos: My Lords, there are often times when individuals in the House are disappointed because they are unable to get in. I understand the feelings of the noble Lord, Lord Peyton; it has happened to other noble Lords in the past. Perhaps I may inform the House on the distribution of questions at Question Time today. There were eight questions from the Conservative Benches, three from the Labour Benches, five from the Liberal Democrat Benches and seven from the Cross Benches.

Earl Ferrers: My Lords, on the question of Questions, can I say how much I agree with the noble Baroness the Leader of the House when she said that Questions and Answers are often too long? They are. Long Answers and long Questions spoil the flow and spoil the fun. Can she also give an assurance that Ministers have not been given an instruction to give long Answers in order to make sure that there are fewer Questions upon which they can be tripped up?

Baroness Amos: My Lords, Ministers have been given completely the opposite instruction, which is to make their Answers as brief as possible.

On Question, Motion agreed to.

Industrial Training Levy (Engineering Construction Board) Order 2005

Extradition Act 2003 (Amendment to Designations) (No. 2) Order 2005

Railways (Convention on International Carriage by Rail) Regulations 2005

Railways Act 1993 (Determination of Turnover) Order 2005

Civil Partnership Act 2004 (Overseas Relationships and Consequential, etc. Amendments) Order 2005

Code of Practice: Access and Unfair Practices during Recognition and Derecognition Ballots

Code of Practice: Industrial Action Ballots and Notice to Employers

Baroness Amos: My Lords, I beg to move the seven Motions standing in my name on the Order Paper.
	Moved, That the draft instruments be referred to a Grand Committee.—(Baroness Amos.)

On Question, Motion agreed to.

Fishery Limits (United Kingdom) Bill [HL]

Read a third time; an amendment (privilege) made; Bill passed, and sent to the Commons.

Speakership of the House

Baroness Amos: My Lords, I beg to move the Motion standing in my name on the Order Paper. This Motion is part of a process which began in June 2003. I think it would be helpful briefly to set out the background. At that time, as part of a Government reshuffle, the post of Secretary of State for Constitutional Affairs was created, and the abolition of the post of Lord Chancellor was announced, with implications for the Speakership of this House. In light of the lack of consultation, widespread concern was expressed by Members of this House.
	My predecessor, Lord Williams of Mostyn, held a wide consultation which resulted in the setting up of the Select Committee on the Speakership, chaired by the noble and learned Lord, Lord Lloyd of Berwick. The committee's terms of reference were:
	"to consider the future arrangements for the Speakership of the House in the light of the Government's announcement that it is intended to reform the office of Lord Chancellor".
	The committee took evidence and reported in November 2003. The House debated its report in January 2004. The report of that committee remains an essential building block in the process.
	Discussion of the Speakership was then put on hold pending the outcome of deliberations on the Constitutional Reform Bill. That Bill became an Act in March this year. The Constitutional Reform Act and the accompanying concordat between the Government and the judiciary have totally transformed the office of Lord Chancellor. Although the title "Lord Chancellor" is retained, when the relevant parts of the Act are implemented the Lord Chancellor will no longer need to swear a judicial oath and will no longer need to be a Member of this House. It will therefore be possible for this or any future Prime Minister to appoint a Member of Parliament as Lord Chancellor. It is therefore my strong view that this is an opportune—

Lord Tordoff: My Lords, when the noble Baroness says a "Member of Parliament", does she mean a Member of another place?

Baroness Amos: My Lords, that is absolutely correct. I mean a Member of the other place.
	It is therefore my strong view that this is an opportune moment for this House to return to consideration of the matter of the Speakership of this House. It is a matter on which I think the House needs to reflect rather than be forced into making decisions in haste.
	I now turn to the Motion before the House this afternoon. Any decision is, of course, a matter for this House. However, in putting the Motion before your Lordships I have been guided by the following. First, it is my view that this House needs a strong independent voice, a voice for Back-Benchers, not one representing the views of the usual channels. In view of that, I propose,
	"that this House should elect its own presiding officer".
	I use "presiding officer" as a generic description, with a small "p" and a small "o". "Elect" means a process involving candidates and votes, so that the presiding officer has the clear backing of a majority of Peers; a presiding officer chosen by the House from among its own Members and accountable to the House alone, rather than chosen by the Prime Minister.
	Secondly, I refer to the unanimous view in the Lloyd committee report that this House should continue to self-regulate, and that any presiding officer should be the "guardian of the Companion". This House greatly values its culture and ethos, much of which flows from the important principle of self-regulation. I would certainly want to see the continuation of self-regulation at the heart of any future decisions on the Speakership of this House.
	Thirdly, I refer to the important role this House can play in raising awareness of the important work of Parliament in scrutinising legislation and holding the Government to account. I would want any presiding officer of this House to have a strong representational role and a strong role in public engagement. The recent Hansard Society report, Parliament in the Public Eye, offers some interesting proposals on these matters.
	These are the issues that have shaped my thinking but this afternoon is not the time to go into detail on these matters. In terms of working out the detail, the Motion proposes the reconstitution of the Lloyd committee, with broadly similar membership to before. I am grateful to the noble and learned Lord, Lord Lloyd of Berwick, for being willing to take on this fresh task. The committee's role will be to come up with recommendations on the many detailed matters that flow from the central proposition. These will include the presiding officer's role and functions, both inside and outside the Chamber, the title of the office, the process of election, pay and pension and accommodation and staff.
	The committee's original report covered all these matters and will give the new committee a good basis from which to start. The committee will, of course, want to take account of the debate last year, but will also want to take further evidence from Members of the House. The Motion invites the committee to report by Christmas with recommendations. In the new year I will move a Motion to enable the House to decide on those recommendations.
	It is decision time for this House. I do not think it is appropriate for a government Minister to continue to be the Speaker of an independent legislative Chamber. Two years ago the Prime Minister offered to give up this piece of patronage; he deserves a reply. This is an opportunity for this House. I strongly believe that a presiding officer, by whatever name he is known, elected by the House is right for the House and will be good for the House. I commend the Motion to the House.
	Moved to resolve, That this House should elect its own presiding officer; that a Select Committee on the Speakership of the House be appointed to consider further how to implement this resolution with full regard to the House's tradition of self-regulation; that the following Lords be named of the committee:
	L. Ampthill, L. Carter, Bp. Chelmsford, L. Desai, L. Freeman, B. Gould of Potternewton, L. Higgins, L. Lloyd of Berwick (Chairman), L. Marsh, B. Miller of Chilthorne Domer, L. Tordoff, L. Trefgarne;
	and that the Select Committee shall make recommendations to the House by 20 December 2005—(Baroness Amos.)

Lord Strathclyde: My Lords, we in this House know from the desperately close votes over the office of Lord Chancellor that this is a debate that half the House would rather not be having at all. After all, many of us are entirely satisfied with the role of the noble and learned Lord, Lord Falconer, in person and with the role of the Lord Chancellor as Speaker of this House. I believe that the noble Baroness the Leader of the House, with her feel for the House, instinctively understands that and has reflected that in her Motion today, which I accept and support.
	But there is a little more to it than that. The reality is that no objective observer would say that this House needed to make a change. Our proceedings are in the main courteous, businesslike, orderly—quite unlike many aspects of another place. I have been here a long time, but I have never heard a single person say that the conduct of our House is bad or that Peers need a presiding officer to knock them into order. Frankly, we have never needed such a figure and, if we are wise, I do not think that we should have one now. But that is a matter on which the Select Committee proposed by this Motion will have to deliberate. We can and will debate it again when it reports. Members of the committee will no doubt listen carefully to those of your Lordships who speak today.
	Let me be clear about my position. I voted, as did most of the House, to keep the ancient office of Lord Chancellor. My party said that if we won the election we would appoint a Lord Chancellor in this House, and that remains our position. That turned out to be the Government's position too. We still have a Lord Chancellor, who has indicated that he is ready to continue to preside on the Woolsack, although the House has eased the burden of that duty and reduced attendance to about half an hour on only three days of the week at the maximum, and Leave of Absence has never been refused.
	The office of Lord Chancellor lends dignity to this House. It underscores the authority and precedence of the House. I hope that the noble and learned Lord, Lord Falconer, will continue to sit on the Woolsack and when the time comes for him to be replaced that the Prime Minister will continue to appoint a Lord Chancellor of weight and substance in this House.
	The Prime Minister need not fear, as he says, and as the noble Baroness the Leader of the House reiterated today, that it is wrong to name a Lord Chancellor who presides here. The US Senate does not feel demeaned because the President of the United States chooses its presiding officer. Neither do I; quite the reverse. The Opposition want to see a Lord Chancellor who is a Cabinet Minister as a presiding officer in the House. The system has worked well, and we should not readily change it as a by-product of the mistake of removing the Law Lords from this House; something that I still hope will not happen.
	I accept that the Prime Minister now has the freedom under statute to bestow the title of Lord Chancellor as a bauble on a rising star in another place who catches his eye; the Mr Byers or the Mr Milburn of the day. I hope that he does not do that, but we need to plan ahead what to do if he did. That is how I approach the Motion and it is why I favour the reappointment of the Select Committee that it provides for.
	The Select Committee will, however, have a different backdrop to its deliberations. Before, it was told to work on the premise that the office of Lord Chancellor had been abolished. Now it must work in the full knowledge that the House has resolved that that great office should be retained. We will await its advice. This is a matter for the whole House, one about which I urge the whole House—new Peers and old—to think very carefully, for the wrong step could alter the character of the House.
	I know that some think that is exaggerated. "How can it be that simply by appointing a so-called 'light touch' presiding officer you might change the House?", they say. The answer is simple—human nature. Currently, our Standing Orders constrain the presiding Peer. The whole House is the guardian of its rules and procedures. The whole House is a House of Peers, all of us with equal rights and responsibilities; none with authority over any other. Many fear that once you elevate one Peer above the rest, however slightly, to decide on who may speak next, to enforce time limits, or to be—in that insidious phrase—the guardian of the Companion, that Peer will extend the amount of intervention. Before long, we will have appeals to the Chair, points of order, and more of the characteristics that disfigure the other place. Each intervention from the Chair will become a precedent, a platform from which further advances will be made. We may not want it and we may not intend it, but we would have changed ourselves without thinking. I would rather have the courtesy and effectiveness of the procedures we have now than risk a Chamber in which Peers were no longer the masters of their own conduct. Self-regulation equals self-restraint, and it is that self-restraint that has made the House what it is today.
	So I am a sceptic on the case for change. If the day comes when we have no Lord Chancellor, we will still have a Lord Chairman, and it seems obvious that the holder of that office could assume the main presiding role for any period when the House was denied a Lord Chancellor by a Prime Minister. If that person is elected, rather than chosen, as now, by the House, I have no strong feelings about that. The present system has not worked too badly, however, and we should wait and see what the Select Committee recommends. We would all deprecate the emergence of bitterly contested elections in which the House was divided along party lines over a presiding officer we did not need to invent in the first place.
	I have one other point, if I may. It is not only the office of Lord Chancellor that is now open to change; so, too, is the role of Leader of the House. The Leader is unlike the Leader of another place—a Mr Hain, for example—who is often an aggressively partisan figure. The Leader of our House has duties to the whole House. Since I became Opposition Chief Whip, I have worked with four Leaders of the House on a weekly, often daily, basis, and all of them served the House with distinction. Alongside the Lord Chancellor, they have reflected the feelings of this House in, and to, Cabinet. In the House they have guided our procedures with a sure touch, respecting the need to carry all parties with them.
	The new presiding officer envisaged by some would take away the duties of the Leader as the voice of the House in session. That would be a great pity, not only for the temptations it might place on the Chair, but for the change to the role of our Leader, who could become a more partisan figure.
	We began this process, as the noble Baroness the Leader of the House did not say, with the attempted demolition of the office of Lord Chancellor as a by-product of an ill-considered reshuffle. We should not end with an irreversible change to the role of Leader of the House as a by-product of a change to the role of the Lord Chancellor. That would be a double whammy to the House. I hope the Select Committee will reflect on that carefully.
	The Lord Chancellor and the Leader of the House, as this House's twin voices in the Cabinet, have guaranteed that the revising Chamber has two Members around the Cabinet table. That has led to many errors being avoided in legislation, and we should not let that go lightly.
	I hope that we will proceed cautiously, will not do more than we have to before we have to, and will jealously guard procedures that have helped this House gain immense authority as a revising Chamber during the 20th century.

Lord McNally: My Lords, once again I am impressed, nay, overwhelmed, by the confidence that the present Lord Chancellor enjoys on the Conservative Benches. I must say to him that a Labour Minister usually has to die or resign in embarrassing circumstances to get that kind of enthusiasm from the Conservatives.
	I must also say to the noble Baroness the Leader of the House that when I first took the proposal to my group, the reaction was a bit like Metternich when he heard that Talleyrand had died: "What does she mean by this?". The proposal was initially viewed with suspicion after the reshuffle that tried to abolish the role of Lord Chancellor. I am trying to think of a better and more delicate phrase than "cock-up". Alas, I did not find one.
	In the same way, speeches from the noble Lord, Lord Strathclyde bear close scrutiny the following day in the Hansard.

Noble Lords: Oh!

Lord McNally: My Lords, I would not be so rude as to say that when you shake hands with the noble Lord you count your fingers afterwards, but sometimes, on re-reading, the caveats have greater strength than the approval.
	The noble Baroness the Lord President has brought forward a very sensible proposal to the House. Nothing could be worse than our suddenly finding that the Prime Minister had reshuffled the Government, as Prime Ministers do on September days when they have nothing else to do, and that our Lord Chancellor was down the corridor. That would bounce us into making decisions.
	This suggestion is a sensible look forward for the House, and the noble Baroness has done it in quite the right way. She has emphasised the desire of this House for self-regulation. She has put forward a proposal that certainly has enthusiastic support on these Benches—that the decision on choice of presiding officer should be a matter for the whole House. She has emphasised again the need to preserve the distinctive ethos and culture of this House. However, she has put forward a process that has transparency and time for reflection. Those who have special views will have an opportunity to put forward evidence to a committee that has already proved its worth.
	I am confident that our own nominees to that committee—the noble Baroness, Lady Miller, and the noble Lord, Lord Tordoff—will make a contribution. The noble Baroness, Lady Miller, will do so with all the enthusiasm of youth, and the noble Lord, Lord Tordoff, will do so as a man who knows where the bodies are buried.

Noble Lords: Oh!

Lord McNally: My Lords, it is with some confidence that we accept this proposal, and the House would be sensible to do so as well.

Lord Williamson of Horton: My Lords, it is perhaps worth asking why the issue of the Speakership of this House has come up now. The noble and learned Lord the Lord Chancellor is still with us, despite the announcement on 17 June 2003 that the post of Lord Chancellor would be abolished. So far as I am concerned, he seems comfortably ensconced on the Woolsack. We recognise, however, that his responsibilities have increased now that he is also Secretary of State for Constitutional Affairs and has the workload and responsibility directly resulting from the increased attention being given to constitutional matters. In addition, as has been mentioned, since there is no longer a requirement that the Lord Chancellor be a Member of this House, it is possible to envisage a situation in which he were a Member of the other place. That would then make it necessary for this House to take a decision on a new Speaker.
	As many have said, we should start with the practice of self-regulation, which has a wide measure of support in the House and certainly among the Cross-Benchers. I very much welcome the reference in the Motion to paying,
	"full regard to the House's tradition of self-regulation".
	In the past 34 years, four inquiries by Members of this House have strongly supported that tradition. Those were: the two working groups under the chairmanship of the late Lord Aberdare; the group under the chairmanship of the noble Baroness, Lady Hilton of Eggardon; and the Select Committee under the chairmanship of the noble and learned Lord, Lord Lloyd of Berwick, which not only gave its opinion in favour of self-regulation but stated in paragraph 7 of its report that the overriding theme from the evidence was that,
	"the House wants to continue with self-regulation".
	It follows from that, if the House is to elect its own Speaker, that his or her role and responsibilities must be carefully and strictly defined in order not to trespass on self-regulation. He must complement the self-regulatory role of the House and make his contribution to rendering self-regulation effective, but no more than that. Again, it follows from that approach that if the Motion that the House elects its own Speaker is adopted today, as I believe that it will be, it is indispensable that before any such election is made we be clear on his functions, both within and outside the Chamber. We would need advice on that from the revived Select Committee, under the chairmanship of the noble and learned Lord, Lord Lloyd of Berwick, and I note that it is proposed to have that report by Christmas this year.
	We welcome the intention to look again at these issues and we welcome the appointment of the same Cross-Benchers who participated in the previous inquiry—and the addition of a Bishop to the inquiry team. It may be that many of the conclusions will still stand, but, if the Motion is adopted, the question will become live and we shall need to study the new report from the Select Committee carefully.
	We on the Cross Benches consider the Motion as part of a two-stage procedure. In particular, there are two occasions when the Leader or the Whips intervene, if necessary, to assist the self-regulation of the House. When two or more Members of the House are on their feet at the same time to put a supplementary question, a decision has to be taken. That might be done by the Speaker, although I do not pre-judge the report of the Select Committee. I brought my family here for Question Time yesterday and the two little girls said that it was very boring. I wish that I had brought them today, but the issue is with us and we shall return to it, no doubt, when we have the report from the Lloyd committee.
	The second occasion is when a Member substantially overruns a recommended time. Having observed a few times in the European Parliament the president instructing his officers to shut off the Member's microphone when his time was up, I am more convinced that in our House a light touch is called for, but, subject to that, I see no reason why the Speaker should not advise a Member if he is seriously overrunning his time and reducing the time available for other speakers.
	A number of other questions are important, to which we must return in relation to the report of the Select Committee—whether the Speaker should have responsibility for allowing a Private Notice Question; whether the Speaker could, if necessary, take the chair in the Chamber during the Committee stage of a Bill; and how many Deputy Speakers there should be. There are many questions to be settled.
	However, there is a large measure of agreement already—a Speaker should be elected, not appointed and, I believe, should give up party politics for life. After all, we are becoming experienced with regard to elections in this House—to start with, the Cross-Benchers elect their Convener, the hereditary Peers elected those of their number to stay in the House and there have been subsequent elections when a hereditary peer has died. I was glad to see the recently elected noble Viscount, Lord Montgomery of Alamein, on the Cross Benches today.
	Finally, we believe that the title should be in keeping with the dignity and long traditions of the House. I believe that the majority of Cross-Benchers do not think that the title of "Presiding Officer" would be appropriate. I understood the Leader of the House's comments regarding the use of that term in the Motion, but the Select Committee has recommended a different title, "Lord Speaker". That was approved by the noble Baroness, Lady Boothroyd, which, obviously, weighs with me.

Noble Lords: Oh!

Lord Williamson of Horton: My Lords, that is quite true. To sum up, we must not breach the principle of self-regulation. We must examine carefully, after the Select Committee has reported, the role and responsibilities of a Speaker, if we decide to elect one, in such a way that we do not damage the traditions of the House.

The Lord Bishop of Portsmouth: My Lords, the Motion raises a number of important issues of process and I am aware that that word can be used as a delaying tactic. I do not intend to use that as a delaying tactic here, but it seems to me, and to at least two others on these Benches, that we are not quite doing things the right way round—with House of Lords reform, wherever that may lead, in the air, it seems unwise to set up the Select Committee with the express intention of establishing the Speakership before we have first sorted out those other matters. However, that is not where we are.
	I wish to speak briefly about the functions of the Speakership. The evidence given to the inquiry of the Select Committee, whose report we all have, indicated a not unpredictable variety of views; and, of course, it is not a case of either/or, as the second part of the Motion makes clear. But I want to put in a plea for some latitude.
	No institution has the right per se to stay the same, and if it jogs along on the basis of no change, paralysis can ensue. So the process that we are encouraging is a kind of health check for the institution. Self-regulation and Speakership are not mutually exclusive. But I hope that the full implications of the outworking of self-regulation are not going to be overlooked in the interests of slickness or a desire for political or bureaucratic control.
	Self-regulation takes more time, but it involves in the long term a deeper degree of participation. That includes occasions when we get it wrong and someone puts us right, either in the Chamber, when it can be quite fun, or outside the Chamber, when it can be even more fun. It also includes when we are too pushy, or when we are seen to evade some of our responsibilities, at least in the eyes of some, and that can be even more interesting and challenging.
	Although self-regulation is a more messy pattern, it has a great deal to commend it. But the House will be aware of the scepticism from these Benches about the whole process that led to the abolition of the Lord Chancellorship, at least in the eyes of the Government. These Benches bask in a kind of admiration that the Government got away with it so easily. I therefore hope that the Select Committee will not be pre-committed in this matter, but will have a rather broader range of reference. That is why it is the first part of the Motion that concerns us slightly, though we are not against change. And here I should like to end with a little topical facetious remark.
	Noble Lords will be aware of events that took place not in another place, but in a city, shall we say, in the north of England, which had the benefit of a full-scale Viking invasion that gave birth to its name "York". Noble Lords will also be aware that there will be an Archbishop of York from Uganda who is looking forward to taking his place in this House. I am sure that noble Lords will enjoy his presence. So I end with the topical and facetious remark that the words "Chancellor", "Speaker" and even "Bishop" are no longer gender-specific.

Lord St John of Fawsley: My Lords, I warmly welcome this excellent report—

Lord Barnett: My Lords—

Lord St John of Fawsley: My Lords, it is this side.

Noble Lords: This side!

Lord Barnett: My Lords, I found myself a little worried about the speech of the noble Lord, Lord Strathclyde, because I agreed with some it. He spoke a great deal about the changes that are taking place here, but there was one that he did not mention—the change in the nature of the House and its membership. The membership is changing and is likely to change even more in the not-too-distant future.
	I agree with almost everything that the noble Lord, Lord Strathclyde, said about self-regulation, and I agree also with what was said by the noble Lord, Lord Williamson. It is a crucial point for the Select Committee when it looks at this role. I take the point made by the noble Lord, Lord Strathclyde, that the newly elected person leading this House, in the sense of sitting on the Woolsack, should not have too much power. I very much agree with that and I hope that the Select Committee will look at it again. It is the most vital point in the whole exercise.
	If we give this person too much power, we really will change the nature of your Lordships' House. I would regret that very much. The noble Lord, Lord Strathclyde, made a good point when he said that we should not elevate this person to too high a position. I am even worried about the title. We should not make it seem as though we have another Speaker in this place, because we do not want a Speaker in your Lordships' House.
	I also take the point that we might be becoming too "political" in the party political sense. Not long ago, I remarked in your Lordships' House that it seems a bit silly for either the Opposition or Government Front Bench to make party political points when nobody here has a vote and very few people outside are listening. So, it really is rather silly. I hope that we will not become too party political in that sense. Having sat in the other place for nearly 20 years and here for over 20 years, I know that we are very different from the other place, and I am delighted at the difference. I find that this place suits me very much indeed in comparison with some of the five years that I had to spend replying to questions in the other place.
	The resolution which has been moved seems to me a very sensible one. I am sure that my noble friend can confirm that if the Select Committee does not come up with proposals that I or anyone else does not like, we shall have an opportunity to vote against the appointment. I see my noble friend the Chief Whip nodding, because he always agrees with me.
	I do not want to go on too long. Whatever the title, the resolution moved today will put the power in the hands of the noble and learned Lord, Lord Lloyd of Berwick. I should be very happy to see him in that role. We worked closely together on the House Committee and I know that he is a noble Lord of great distinction. He will come up with proposals with which I hope the House as a whole will agree. For my part, I am certainly happy to see him in that role.

Lord St John of Fawsley: My Lords, I thank the noble Lord, Lord Barnett, for not having given way to me because it has enabled me to creep in in his bright shadow and utter a few short tweets after his great flood of persuasive eloquence. I think that puts it succinctly.
	This is an excellent report. It has been thoroughly researched and thought through and we should be grateful to the noble and learned Lord, Lord Lloyd of Berwick, for his work and also for the work of the other members of the committee. The Motion moved by the Leader of the House, Lady Amos, is also an excellent Motion.
	The reason for supporting both the document and the Motion is that there is one golden thread which runs through them both: the self-regulation of this House will be preserved. That is a most important principle to be established. Around that we can have an interesting discussion.
	I am sorry that my noble friend Lord Strathclyde attacked the record of leaders of the other place. I have no axe to grind on this matter, but I always understood that the Leader of the House in the other place was not a partisan figure and that the secret of being a successful Leader of the House in the other place, as in this one, is to represent the views of the whole House, and if anyone becomes a partisan figure in either place they will bring their careers to an even shorter conclusion than mine was.
	That should not prevent us from considering sensible reforms that are governed by this guiding principle. First, transferring the role of deciding between different speakers or would-be speakers—I mean noble Lords who are attempting to get into the debate—from the Leader of the House to the proposed Speaker seems sensible and is something that need not worry us over much.
	We all know that geography is more important than history, and the fact is that it is easier to judge the mood of the House when you are at its centre, rather than when you have to look behind you to see who is trying to do what and, equally, looking to the Cross-Benchers and the Bench of Bishops. Incidentally, I am delighted that a Bishop is to be a member of the Select Committee. We too often forget that the Bench of Bishops represents an essential interest in our society and should be heard.
	I sympathise with those who feel that there is a danger of a creeping Speakerism. That would be quite in conflict with the ethos of this House. That ethos, although it is subtle and sometimes arcane, is nevertheless extremely powerful. I know no Member of this House who has not come to the House and been influenced by it and had to adapt to it, whatever his or her role in another place.
	I commend the report for its distinction between power and influence. In many ways, influence is more important than power. We should recognise that. Bagehot laid down the role of the sovereign in terms of influence, to be consulted, to encourage and to warn. Those are precisely the qualities and subjects that should be within the Speaker's influence. I like the felicitous phrase in the report, "gentle intervention". That is exactly what we expect from the Leader of the House—we had an excellent example of her gentility today; although I regret to say that I missed the first part of it, but it was obviously the greatest show on earth. We need that spirit to be preserved in the House.
	My criticism of the report was raised by the noble Lord, Lord Barnett, in his characteristic incisive way, when he said: what is the good of having these marvellous speeches and great contributions made here if no one is listening to them? I think that put it a bit harshly, because someone is listening to them and someone is reading them. The Speaker of this House does not need to change what goes on in this House at all, but this House needs projection to the outside world. That is what the Speaker should be able to do, to draw people's attention to the work of the House of Lords, to make the House of Lords a centre that could, in its own way, become as important as the House of Commons. I commend the Select Committee, as reconstituted, to consider that matter and make some positive suggestions in that regard.
	The Speaker should also be resident in this place, not in the State Apartments, modestly redecorated—at the behest of a Select Committee—for which the distinguished occupant of those chambers was subsequently excoriated. But that is life. It is not only life in general but political life in particular. We all have our crosses to bear. I remember the terrible trouble that I had when I was in the Privy Council and had flowers put in my office every day. There are three things that the public cannot abide: Ministers having wallpaper, flowers or a bath. I remember the terrible trouble that the late Lady Castle got into because she installed a tiny shower in her rooms.
	The Speaker should be resident here. I speak from my experience as a former master of a Cambridge college, where the residence of the master was essential. A lot of the infighting that goes on in Oxford and Cambridge colleges involves the master trying to get away and the fellows trying to stop him doing so. He should remain, not because of the fellows or undergraduates, but because that presence enables a college spirit to be developed. Such a presence would enable the House of Lords to develop in the way that I have suggested.
	In conclusion, we have marvellous architecture in this House; it is most impressive. People should be given an opportunity to see it. Of course we cannot compete with Westminster Hall but we can certainly compete with the other Chamber. The dignified parts of the constitution remain important, and we should take full advantage of our situation in this place. I hope that when the new Speaker is elected, if the House passes this Motion and it is agreed to, he will have very clear guidance from the Select Committee on this point, which is vital to the future of this House. It is not a question of revolution; it is a question of evolution.

Lord Phillips of Sudbury: My Lords, I wish to speak against the Motion, I am afraid. The Motion says:
	"That this House should elect its own presiding officer".
	It then says that a Select Committee will produce a report based upon that supposition.
	The noble Lord, Lord St John, is worried about creeping Speakerism, but a mighty leap in the direction of creeping Speakerism will take place if we elect a presiding officer. There is no way in which we can go to the trouble as a House of electing our new presiding officer and leave him or her with the powers that currently reside with the Lord Chairman of Committees and his deputies. Those powers are essentially formal; they are not interventionary and, if truth be told, not remotely comparable with the powers of the Speaker in the other place.
	My contention is that we will undermine what so many noble Lords have referred to if we proceed on the basis of election. The noble Baroness said that having an independent voice would guarantee the rights of Back-Benchers. As an everlasting Back-Bencher I have never had the slightest fear that my rights in this place were being trampled upon. One of the great virtues of the House of Lords is that, despite its name, it has an innate egalitarianism as regards Members of this place. I am more assured about the continuance of that essential state of affairs when the Leader of the House is looking after our interests than I would be if a Speaker or presiding officer were looking after them. There could easily develop an equal and opposite reaction in terms of the Front-Bench attitude to the House as a whole if an elected Speaker were responsible for the guardianship of Back-Benchers' rights.
	Perhaps I am na-ve. However, I have spent 25 years advising voluntary organisations on their governance. I believe that the working of this House is a manmade miracle—a woman-made miracle; I beg your Lordships' pardon. It is an astonishing achievement which we take for granted at our peril. "If it ain't broke, don't fix it", and no one has explained to me what is bust.

Lord Weatherill: My Lords, perhaps I may make a few brief remarks against a background of having been Speaker for nearly 10 years and the Chairman of Ways and Means for four years before that. So I have had some experience of these matters.
	I should like to commend the Lord President for her Motion today and take a contrasting view to that of the noble Lord, Lord Strathclyde. He reminded me of a speech—some of my former colleagues in another place may remember it—made by Frank Haynes in a debate on new technology. He ended it with the great phrase, "Mr Speaker, sir, I am all in favour of progress as long as it does not mean change".
	The important reason why we should change and not, I respectfully say, keep the title of the Lord Chancellor is that, in the order of precedence, the Lord Chancellor stands well above the Speaker of the House of Commons. Now that we have an opportunity to make these sensible changes, I think that the Speaker of the elected House should always take a slight precedence over the Speaker of the unelected House. If we retain the title of Lord Chancellor as the Speaker of the House, that will not occur. The name "The Lord Speaker" is quite appropriate. Our Standing Orders and our Companion are festooned with references to "The Lord Speaker". I see no reason to change that.
	I agree with what the noble Lord, Lord St John of Fawsley, said about living on board. The new Lord Speaker should have access to a bedroom. I do not think that he needs to have five or six deputies, as was suggested when we debated this previously. We managed quite well in the House of Commons with three deputies and that should be quite enough for your Lordships' House. However, I think that the Lord Speaker should live on board and have a modest salary and a very generous entertainment allowance. Former Lord Chancellors—particularly Lord Chancellors in my time here, and the present Lord Chancellor—have been very generous in their hospitality and I think that that should continue.
	As to who is chosen, I should like to remind the House of an intervention made by a former Speaker who was under the misapprehension that sherry was a non-alcoholic drink. Some noble Lords may remember him. He was unable to rule on a matter which was brought to his notice rather late at night but said he would do so the next day. When he did, very wisely, the buzz went around the Chamber, "Better talk to the Table, Mr Speaker, sir. Why don't you have a word with the Table". I do not think that we want to have a Speaker who will pontificate on points of order or anything like that. For goodness' sake, do not let us have all the bogus points of order to which I was subjected in the other place. So I hope that we shall have no talk about changing the layout of the Chamber, as has been suggested by some, to allow the new Speaker to have access to the Clerks. He must never be seen talking to the Clerks in the Chamber—wise though undoubtedly they are.
	Those are the brief contributions that I wish to make to the debate. I think that the noble and learned Lord, Lord Lloyd of Berwick, will make an admirable chairman of the committee and I do not doubt that he will bring forward very sage decisions. But not, please, the Lord Chancellor.

Lord Carter: My Lords, the Motion we are debating provides for the first time the opportunity for the House to decide in principle whether it wishes to elect its own presiding officer. There is no need for long speeches because the debate is not about functions, title or accommodation. Those issues will come later once we have the report and recommendations of the reconvened committee to be chaired by the noble and learned Lord, Lord Lloyd of Berwick, if this Motion is agreed to.
	I want to make two brief points, but before I do so, the noble Lord, Lord Strathclyde, with what I think was a slip of the tongue, referred to the terms of reference of the previous committee as concerned with the abolition of the Lord Chancellor. The terms of reference actually referred to the reform of the office of the Lord Chancellor, and of course the office has been reformed. Another point that was not made entirely clear in the speech of the noble Lord—I agree with the noble Lord, Lord McNally, that sometimes one has to listen very carefully to what he is saying—was his reference a number of times to the "reconvened" committee. The committee could be reconvened only if the Motion before us is accepted. Are we right to assume that the noble Lord intends to support the Motion?

Lord Strathclyde: My Lords, yes.

Lord Carter: My Lords, I thank the noble Lord.
	Referring to the speech of the noble Lord, Lord Phillips of Sudbury, the Prime Minister has said in terms that he does not wish to retain the power of appointing a presiding officer for this House. The rejection of this Motion would be to say in effect, "We thank you, Prime Minister, but we would like you to go on appointing our presiding officers, at least until you decide to appoint a Lord Chancellor from the House of Commons. We will then have to sort it out". I suggest that that would do little to uphold the dignity of this House and would send an odd message regarding its confidence in its ability to manage its own affairs.
	Much mention has been made of the principle of self-regulation. As I pointed out when we debated the report produced by the previous committee, the powers of our Speaker—I use that term now because it was the term used in that debate—will grow only if the House agrees that they should do so by voting to amend the Companion to the Standing Orders. The Speaker will be able to rule on order only if the House wishes it and decides to give the Speaker that power. There is no such thing as a point of order in this House precisely because there is no one to give a ruling. Only the House itself can change that, not the Speaker. Indeed, this House could set an example to other chambers by having an elected presiding officer and self-regulation.
	Reference has been made to the Companion and we have heard already from my noble friend the Leader of the House the phrase, "the guardian of the Companion", which was first used by the late and much-missed Lord Williams of Mostyn when he gave evidence to the Select Committee. It sums up well the important role that a presiding officer could perform. Most of it would be played quietly behind the scenes; ensuring, for example, that the rights of Back-Benchers are protected from the depredations of the Executive. As a former chief predator, I know exactly what that means. It is not a role that can be performed by the Lord Chancellor as a member of the Executive and a very busy departmental Minister. An elected presiding officer would certainly have the authority required to perform it. That is a matter of principle on which we have to decide. As I have said, a more detailed debate will follow once we have before us the report and recommendations of the reconvened Select Committee.
	I shall conclude as I began. Does the House wish to accept the principle of electing its own presiding officer? If it rejects that principle, it will in effect leave that decision in the hands of the Prime Minister. If the Prime Minister decides to appoint a future Lord Chancellor in the Commons, the House will then face an undignified scramble to resolve the matter. In my view, it would be far better to take the decision now and then to proceed at a pace of our choosing.

Lord Dean of Harptree: My Lords, I begin by declaring a past interest. I was a Deputy Speaker in both Houses of Parliament for about 15 years, so perhaps I may be allowed a few reflections. The most important differences between the two Houses stem from their different characters, their different compositions and, most important of all, the different ways in which order is kept.
	In another place the party political battle is more intense than it is in your Lordships' House. Members of Parliament feel obliged to speak out in the interests of their constituents and to ensure that their constituents are happy with their performance. As a consequence, it is important that there should be someone to ensure that the Standing Orders, the conventions and the courtesies of the House are observed. It is equally important that that person should have the power of discipline on the very rare occasions when Members of Parliament refuse to accept the rulings of the Chair. In another place, that job rests entirely with the Speaker and the Deputy Speakers.
	How different it is in this place, where we pride ourselves on self-regulation. The first thing that impressed me when I came to your Lordships' House fresh from being a Deputy Speaker in the other place was the self-regulation of this place. It works, and it would be a great shame to destroy it. As a consequence, the Woolsack and the Chair have no power to keep order; the House governs itself and, on the whole, does so successfully. On the rare occasion when a noble Lord steps over the mark, the Government Front Bench will intervene, very politely and very courteously. The erring noble Lord will usually take the advice, and that is the end of the matter. I hope that that can continue. It is another fundamental difference between the way in which this House and the other place conduct themselves.
	There is another difference, in the drawing up of the speakers list. In another place the speakers list, as the noble Lord, Lord Weatherill, knows very well, is drawn up by the Speaker and the Deputy Speakers. They try to ensure that in any debate a fair balance of views is expressed. They would not tolerate for one moment any intervention from the Whips or the usual channels. How different it is in your Lordships' House. The list is drawn up by the usual channels and, as far as I am aware, there is no criticism of that procedure. It is another example of where the system works.
	The third point is in regard to the selection of amendments. In another place the selection of amendments is entirely the responsibility of the Speaker and the Deputy Speakers. They will, of course, try to ensure that all points of substance are discussed, but that has become increasingly difficult these days as the guillotine bites more deeply. In your Lordships' House it is very different. There is no selection of amendments here. All amendments which are in order are on the Order Paper and it is entirely the responsibility of the noble Lord who tabled the amendment to decide whether to move it or whether to say, "Not moved". This is a very valuable safeguard for the House in scrutinising the Government.
	The noble Baroness the Lord President has, with her usual charm, moved a Motion. It is very clear to any old hand in this House that this is a compromise. I do not believe for one moment that this compromise will run, but of course we must await the report of the Select Committee which is to be presided over by the noble and learned Lord, Lord Lloyd of Berwick.
	The Motion refers to two important points. The first is that the House should elect its own presiding officer. The second states that there should be,
	"full regard to the House's tradition of self-regulation".
	I very much doubt whether those two concepts are compatible. If your Lordships' House should decide to elect a presiding officer, we would be on a slippery slope which would lead inevitably to a Commons-type Speaker with all the powers that go with it. I would greatly regret that. It would be contrary to the traditions and spirit in which this House operates. It would destroy something that works and it would make this House less able to do its duty in holding the Government to account.

Lord Hoyle: My Lords, I must say right away that although I deeply respect the noble Lord, Lord Dean of Harptree, I disagree completely with what he has said today. I want to draw in a different way on my experiences in the Commons. I was in the Commons for 21 years. I served under four excellent Speakers, one of whom has addressed us today. I learned an awful lot from my experience. In addition, I also had the rather difficult task of being chairman of the Parliamentary Labour Party.
	The one thing that I found when I came to this House was that what applies in the other place is certainly not suitable for this House. It would not work, we would not want it and, quite obviously, it would not fit in with the ethos of the House either. Having said that, even though it has been derided by the other side today, I like the phrase "guardian of the Companion". That is what we need in this House. We need someone who can be the guardian of the Companion. I agree that we must proceed in the way that we are doing now in relation to self-regulation, but, we need someone who is independent, who can administer very lightly and who will have the respect of the House. If they are going to gain the respect of the House they must be elected by the whole House. That is the way forward.
	I say to the noble Lord, Lord Phillips, that he cannot close the door to progress altogether. If we do, as has already been said, the Prime Minister will take the decision for us. We do not want to be in that position. I agree completely with my noble friend Lord Carter when he says that we do not want to be plunged into that kind of situation when we have not thought about it. Now is the chance for us to determine our future. We should go along with what the Motion suggests in electing a Speaker, but also call on the Select Committee to consider this matter once again and report back to the House so that we can have a debate on it.
	The solution that we shall get, whatever we term the person who takes the job—President, Lord Speaker or whatever—will mean that we shall uphold the dignity of the House. We shall improve the efficiency of the House, and show that this House is prepared to accept change when change is necessary.

Earl Ferrers: My Lords, I find myself in considerable agreement with the noble Lord, Lord Williamson. He said that he could not understand why—there is no particular reason—we are having this Motion now. I agree, unless it is because of the Government's curiously insatiable desire to upheave everything which works well and to notch up a conquest in the destruction of the constitution and your Lordships' House.
	We have been through this so many times. On the whole, your Lordships love the office of the Lord Chancellor and are proud of it. Sometimes, depending on our mood and depending on his, we love the Lord Chancellor himself. Think of that. And we love self-regulation. We do not want a Speaker. It all works well, as has been said by several noble Lords, including the noble Lord, Lord Phillips. So why is there this great clamour to get rid of it all?
	I know that the noble and learned Lord the Lord Chancellor would love to give up that part of his job that consists of being Speaker and even to give up being the Lord Chancellor. For the life of me, I cannot understand why; after all, it is the most prestigious and respected office, admired up and down the country and admired outside the country as well. It is the second most important post in government—and if he did not want it, I cannot understand why he took the job on. But of course he did.
	The noble and learned Lord the Lord Chancellor sent his evidence to the committee chaired by the noble and learned Lord, Lord Lloyd of Berwick, saying:
	"I hope that the Lords would feel able to make different arrangements to allow me to cease to be Speaker".
	But he generously went on to say that,
	"I will go on doing the job of Speaker of the House of Lords for as long as the House of Lords wants me to do it".
	That is quite a good undertaking and guarantee, and one that I believe we all accept. But he went on to say,
	"It would facilitate other things that I do if I cease to be Speaker".
	What is it that the noble and learned Lord the Lord Chancellor wishes to do that he cannot do now and his predecessor as Lord Chancellor did not do—especially now that much of the work of the Lord Chancellor, as head of the judiciary in particular, has been taken away by the Lord Chief Justice?
	With the greatest respect to the noble and learned Lord the Lord Chancellor, why should the House for ever change its customs and methods of working, which have been established for centuries, just because of the personal whim of one temporary incumbent, however liked and respected he may be? After all, his regular duties as a Speaker take only about one and a half hours a week; now that we have absolved him of sitting on Thursdays and he sits at Question Time on Mondays, Tuesdays and Wednesdays alone, one would have thought that that would not be regarded as an excessive workload. It ought to be within the bounds of what one might call manageability.
	But because the noble and learned Lord the Lord Chancellor wants out, we are to ask the noble and learned Lord, Lord Lloyd of Berwick, to consider the whole position again with his committee and to come up with recommendations. The noble and learned Lord, Lord Lloyd, has already done that once before; he suggested that the Speaker, for want of a better title, should be paid £100,000 and should have a panel of 16 deputies—and presumably staff and rooms in the House, too. That is pretty flamboyant and extravagant stuff. Then, of course, we have to find something for the Speaker to do. The noble and learned Lord, Lord Lloyd, said:
	"If we are to get a person of stature to serve as Speaker, he must be seen to perform at least some functions in the Chamber".
	That is a pretty staggering conclusion, which I think most of us would agree with.
	Not surprisingly, several noble Lords, with characteristic modesty, hope that destiny will call them to that high office—and they are doing their best to ensure that destiny knows of their desire. But we must find something pretty substantial for the new Speaker to get his teeth into. What is it going to be? The Motion refers to setting up a Speaker,
	"with full regard to the House's tradition of self-regulation".
	Unlike the right reverend Prelate the Bishop of Portsmouth, I do not believe that these ideals are compatible. I agree with the noble Lord, Lord Phillips of Sudbury, that once you get this you will get a "creeping Speakership", as he put it. I thought that his views were excellent. The two ideals are simply not compatible; they are opposites. Either the House regulates itself, which it does at the moment pretty effectively and which everyone likes, or a Speaker does it for us. You cannot have the two together.
	I say this with the greatest respect for the noble Lord, Lord Weatherill, and the noble Baroness, Lady Boothroyd, but the Speaker is a thing which you kick around—anyhow, you do if you are in another place. "On a point of order, Mr Speaker"; "Can Mr Speaker give a ruling on this, that or the other?" The pressures upon the Speaker come from each and every side as Members try to exert their influence for their own devious ends. I can see no reason why that will not happen here if there is a Speaker. The noble and learned Lord, Lord Lloyd of Berwick, said in his report, at paragraph 23:
	"If the Speaker is given any functions at all, they are likely to increase over time, thus diminishing self-regulation".
	That is a very fundamental finding of the noble and learned Lord's committee.
	If the Speaker does not have any functions at all, what on earth are we all doing? But if he does have functions, they will grow and there will inevitably be less and less self-regulation, and it may even be lost. Most of your Lordships do not want that.
	The next thing that we will find is that the Speaker will be selecting amendments, as my noble friend Lord Dean of Harptree said. We can only imagine the acrimony that will cause. The Speaker in another place selects the amendments to be debated; in your Lordships' House every amendment put down has to be debated. In the political parties Bill 2000 100 pages of government amendments were put down in the spill-over. Will the Speaker select which of those will be debated? Or, because they are government amendments, will they just motor through the selection process at the expense of other noble Lords' amendments? The mind blossoms with the terrible possibilities.
	I really do think that the Government are pushing this train down the wrong railway line, and remember that it is the Government who are doing this, trying to push your Lordships into agreement. As with so many of the Government's proposals for altering the constitution and your Lordships' House, these proposals are undesirable, unwelcome and unpopular, and I believe they will be destructive. They will not be an improvement. I wish that the Government would leave something alone just for a little while to let things settle down, because we seem to be on an endless travelator going heaven knows where.
	By all means let the noble and learned Lord, Lord Lloyd of Berwick, and his merry men look at the problem, and we shall be able to see what we think of their conclusions when they come up with their proposals. My noble friend Lord Strathclyde said that he was a sceptic with regard to change, but he is a mild-mannered fellow. I remain totally convinced that any move towards having a Speaker will be catastrophic for the House as we know it, for the atmosphere in which the House conducts its business and for the ability of the House to perform its functions courteously, happily and successfully.

Lord St John of Fawsley: My Lords, before my noble friend sits down—

Noble Lords: Cross Bench!

Lord St John of Fawsley: My Lords, will he give me back my phrase of "creeping Speakership"? There is only one thing worse than creeping Speakership and that is flagrant plagiarism.

Earl Ferrers: My Lords, I always thought that my noble friend was a creepy-crawly and now I shall remember that.

Lord Desai: My Lords—

Noble Lords: Cross Bench!

Lady Saltoun of Abernethy: My Lords, I very much agree with what the noble Lord, Lord Dean of Harptree, said, but I am not quite as sanguine as him. When I first came into this House more than 25 years ago, if two noble Lords or more rose at the same time at Question Time to ask supplementary questions, they would both have sat down and said, "After you". Now, as your Lordships are well aware, they stand there shouting, "No, this side". I have been very sad to see that lovely old courtesy die. I have noticed that every time there has been a big intake of new Peers the standards of courtesy in this House have plummeted. Very often they have plummeted temporarily and then they came back again once the new boys have mastered the rules. However, over the years they have slid downhill.
	If we are to continue to be a self-regulating House, it is absolutely essential that the leaders and chief whips of all the parties make sure that their new boys study the Companion to the Standing Orders and that when they transgress its rules they are hauled over the coals. Some of your Lordships may remember when Lady Hylton-Foster was convenor of the Cross-Bench Peers. My goodness me, if you stepped out of line, you got it, hot and strong. That is what should happen until the new boys and the new girls are familiar with our practices.
	I should hate to have a Lord Speaker in this House doing any more than the Deputy Speaker, the noble Lord, Lord Grenfell, who is sitting on the Woolsack, is doing at present. However, unless the leaders and the chief whips take care, that is what it may well come to.

Lord Desai: My Lords, the Conservative position as outlined by the noble Lord, Lord Strathclyde, and supported by the noble Earl, Lord Ferrers, and the noble Lord, Lord Dean, seems to me to be a case of "Yes, but". The idea is that we are self-regulating and we love the Lord Chancellor and therefore we shall not be moved. The logical consequence of that position for a true Conservative would be that, no matter where the Lord Chancellor is, he should preside over this House. After all, Sir Thomas More presided over this House without being a member of it. I hope that the noble Lord, Lord Strathclyde, will propose that if the Prime Minister chooses to appoint a Lord Chancellor in the Commons, be that as it may, we shall have nothing but the Lord Chancellor beside us because that is what we love.
	Many of us would not go that far. We have to prepare for the contingency that any day he likes the Prime Minister can choose to reshuffle the Cabinet and remove the Lord Chancellor from your Lordships' House. We now have the legislation at hand. The Prime Minister may decide, like many other imperialists, to set us free. Of course, we do not want to be free. Why would we want to be free? We love domination by the Prime Minister. We love his powers of patronage. The noble Lord, Lord Strathclyde, wants the Prime Minister to have more patronage, not less. Therefore, he wants the Prime Minister to continue to appoint a Lord Chancellor in your Lordships' House to preside over us.
	Sadly, the Prime Minister is not a Conservative, and he is likely to do radical things. Therefore, we have to be prepared. The fear that many noble Lords have of the slippery slope has been countered by what my noble friend Lord Carter said. The report which the noble and learned Lord, Lord Lloyd, issued as chairman of the committee states that any change in the procedures of this House will require a change to the Companion, and that any change to the Companion has to be voted by the whole House. Therefore, the slippery slope is not there. There is no slope. There may be other things but there is no slippery slope down which the House will go unless the House agrees by its own volition. That has to be remembered.
	Two things combine. The first is the very high probability that we shall lose the Lord Chancellorship because people at the other end of the building are much hungrier for Cabinet posts than we are, and they usually win. Secondly, if we have to elect a Speaker, the safeguard that we have constructed for ourselves is the proposition that there is no change in the procedures of the House without a vote by the whole House. That is why the Speaker is the guardian of the Companion.
	I would also like the Speaker to be a friend of the Back Benchers, because I do not like the place to be run by usual channels. I happen to be on the Back Benches and likely will remain there for the foreseeable future. Therefore, I would like the Back Benchers' interests to be looked after by the Speaker. Those two things should persuade us that by and large let us get on with it and let us vote on this proposition. Let us expedite the process whereby the noble and learned Lord, Lord Lloyd, can lead us again to a better report.

Lord Brooke of Sutton Mandeville: My Lords, four years or so ago, the noble Lord, Lord Desai, and I had the experience of listening to a two-hour speech by President Castro. After he had been going for half an hour, it was clear that there was no structure to his speech and therefore when he reached the end of it there was no way in which he could know that he had done so. It was a prime case of heavy-touch regulation and an example to us all.
	I was struck when reading the previous Select Committee report of November 2003—so ably chaired by the noble and learned Lord, Lord Lloyd of Berwick, and of which the noble Lords, Lord Desai and Lord Carter, were distinguished members—by how it was founded on hypotheses. The very tone of the report properly implied contingency planning rather than paving legislation. The procedure implied by the Motion is a classic instance of the empiricist tradition of these islands. We are crossing a slow but broad stream by way of stepping stones. We are testing each stone to see whether it will take our weight before contemplating proceeding to the next one, while allowing for the possibility that we shall. At the same time, no harm will have been done if we pause in mid-stream or decide to retreat to the familiar bank behind us. My remarks are therefore geared, as have been those of a number of other noble Lords, to the imperative of contingency planning, and my stone-testing is directed to whether the desideratum of light-touch self-regulation is achievable under the new scenario.
	The first report, when there were necessarily more conditional clauses about, seemed to me rather more a seminar than an inquiry. The very characteristic that critics of our behaviour aim at us—that a Bill's remaining stages are larded with the reiteration of Second Reading speeches—suffused the report. Ostensible questions were often longer than the answers they received and conspicuously free of question marks. The report seemed to me none the worse for that, as a seminar was well suited to a ground-clearing exercise, but the next report will perhaps need to be a more rigorous and targeted inquiry.
	That said, if I have to take a sermonic text from the first report as the epitome of its preoccupation with light-touch self-regulation, it would be the second and final sentence of paragraph 43 on page 12. The paragraph is entitled, "Providing guidance to Members". The first sentence reads unexceptionably:
	"The new Speaker should play a leading part in welcoming new Members to the House and in ensuring that they are aware of our customs and traditions".
	Amen to that. The second sentence, my chosen text, read more memorably:
	"Longer-serving Members could also on occasion benefit from the Speaker's guidance".
	A secondary text would be the first of the two fundamental responsibilities of the new Speaker or Deputy Speakers, as specified by the late, great Lord Williams of Mostyn, when he said in paragraph 29 of page 5 of the collective oral evidence:
	"One, to be the guardian of the ethos of this place".
	Despite my late noble kinsman and my late noble relative having sat here, I had no conception of the "ethos of this place", in the phrase used by Lord Williams, before I arrived here a little under four years ago.
	Like many present in your Lordships' House today, I attended this morning the memorial service of the late Charles Morrison, whose father sat in this House for many years. Charles Morrison was a Wiltshire MP from 1964 to 1992. Mention was made in today's service to the rancour inimical to his sense of the ethos of the other place, which grew up there in the 28 years that he was a Member. It was a rancour that took root in the thickets of procedure and the spinneys of points of order. That rancour must never be allowed to enter here into the blessed plot that is our inheritance from the late Lord Williams and his sense of our ethos. Avoiding copying the Commons is the paradigm of the road map we should follow.
	I offer this, therefore, as one pointer to the new committee: it needs to clothe the skeleton of light-touch self-regulation with a precise index of what it does not involve. I give a single example that has been quoted in a slightly different manner by my noble friend Lord Dean. My admiration and respect for the noble Baroness, Lady Boothroyd, when she was Speaker, and her tenure of office, both within the Chamber of the Commons and outwith it, is without limit. However, I thought one of her recommendations to the first Select Committee was mistaken, however good the foundation of Commons procedure from which it sprang. She took the view, in paragraphs 57 and 93, that her practice of drawing up a speakers' list in the other place was worth transferring here.
	I humbly disagree. Not only did the Commons practice of Divisions at set hours sometimes produce shocking speeches by unwilling speakers dragged in by the Whips from the highways and byways to fill the gaps before the Divisions took place, but the Lords practice of dividing the time available by the number of volunteer speakers elevates the quality of what is said through a discipline that is arithmetical, rather than subjectively administered.
	The logic flows from the smaller supply of speakers in your Lordships' House. My late noble kinsman was elected to the other place in 1938, in the days before ambitious carpetbaggers arrived as a general species. His view was that the business of that House at that time was actively carried by about a quarter of its nominal strength. My comparable calculation today within your Lordships' House is about the same. Pressure of numbers of voluntary speakers in this House, therefore, does not require us to use procedures that the Commons requires to ration speeches. I mean no criticism whatever of the noble Baroness; I simply stress that the new committee should test any proposal that derives from the Commons to see whether it will actually suit us.
	When the IRA Balcombe Street gang reached Parkhurst in 1978, the Kray brothers, who were already resident, learnt that they intended to inject aggro into the prison's affairs to undermine the British authorities. At exercise, the Kray brothers rubbed shoulders with the gang. The brothers said that they had heard these rumours, that they wished the gang to know the present arrangements in the prison were entirely satisfactory to themselves, and that, in the event of the gang changing that situation, they would have to take action. If there was any doubt about what that action might be, the Krays had a scrapbook in their cell the gang could consult.
	Lord Williams of Mostyn once said to me privately that however aggressive the intentions of some Members of any party who arrived here from the other place, the ethos of this place always tamed them. The process is more pacific than the Kray brothers intimated, but it is critical that our ethos should remain of a nature to prevent the level of aggression rising.

Lord Elton: My Lords, in introducing her Motion, the noble Baroness used a phrase that had been echoed around the Chamber, "guardian of the Companion". Many people have asked that the new Speaker should be just that, and in the next breath said that they should have no power over our proceedings. I would like to know how anyone can be guardian of the Companion without actually drawing Members' attention to breaches of the Companion and asking them to desist. There is an inconsistency there that tends towards the direction in which many noble Lords have said things will go if we have an elected Speaker. This is quite an important question. What is meant by "guardian of the Companion"? I would like to see that taken out.
	I would also like to draw your Lordships' attention to one small item in the original report of the Committee before it was reconstituted, to which I assume, as it has the same chairman, the Committee will be frequently referring. Paragraph 6 proposes that the new Speaker be an ex officio member of the House Committee and its chairman. That considerable accretion of authority was passed without any comment in this House at all. If we are to create a new animal, we need to know of what it is made. We need to remember that that will give it a considerable amount of administrative authority throughout the building, as well as in this Chamber.
	If I thought that supporting the noble Lord, Lord Phillips, and my noble friend Lord Ferrers in their opposition to the Motion would retain in the Cabinet two Members of this House, I would vote with them with alacrity. However, that pass has been sold with the abolition of the function of Lord Chancellor as we knew it. It is with great regret that I see no way of retrieving that position. If the noble Baroness could say anything whatever that encouraged us to think that the future would not leave us with the solitary, and if solitary often disregarded, voice in Cabinet, I would find the whole proposal far less depressing than I do.
	In the mean time, I draw those matters to noble Lords' attention. I also correct a tiny error on the part of the committee. Paragraph 13 states that,
	"it is true to say that virtually the only power of the Lord Speaker is to bring time-limited debates to an end at the appropriate time".
	I declare an interest as a Deputy Speaker. I brought such a debate to an end on one occasion, and was roundly rebuked for having done so before the Clerk had given me the authority to do so by standing up and bowing to me. The present position is entirely powerless. We are creating something different. We ought to do it with the greatest of care.

The Earl of Onslow: My Lords, there is an extremely interesting thing that has completely missed the attention of all your Lordships. The noble Lord, Lord Grenfell, is not sitting in your Lordships' House, because the Woolsack is not in the House. It is also not a legal requirement for the Lord Chancellor to be a Member of your Lordships' House. "Ah", everybody says. I am citing Halsbury's Laws of England. The question raised by the noble Lords, Lord Carter and Lord Desai, vanishes as a puff of smoke on a morning breeze.

Lord Desai: My Lords, I said that the Lord Chancellor did not sit in the Chamber, which is why a Member of the Commons can preside over your Lordships' House.

The Earl of Onslow: My Lords, if the noble Lord did, I am deeply apologetic.
	If Halsbury is right—I assume that he is—we are talking about a situation that need not exist. We want the Lord Chancellor to stay on the Woolsack because he has no power. We do not mind in the slightest the Prime Minister appointing somebody without power. We mind a lot if it is argued that someone there should have power; that is what we do not want. If we put someone there without power, what on earth is the point, as my noble friend Lord Ferrers said, of producing an annual income of £100,000 plus that of 16 deputies for a minimum of 57 hours' work? That is quite a salary, is it not?
	We work well. I have been in this House a long time and have noticed, as other noble Lords have commented, how people come in from a different ethos outside and it is magic how they suddenly and automatically become the equal of the 21st Duke of Buccleuch. It is extraordinary. Some people call it corruption, others a magic process of osmosis. It is greatly to the credit of the large number of new Peers who absorb that ethos and, to a certain extent, throw off their shoulders too great a party loyalty and have been prepared to vote against their own side. We should be proud of that.
	We do not want someone sitting on the edge of the House, outside it, bossing us about. We are quite happy working in our own way. I have only one minor exception to that rule. Why do ex-European Commissioners always insist on asking questions on European Statements immediately afterwards and not let other noble Lords get in? But that is only a minor niggle.
	Please, let us keep the magic of this House. We do not have to have the Lord Chancellor in this House, but please let us continue the job that we do. I suggest that we are beginning to do it better and better.

Lord Shutt of Greetland: My Lords, I have been concerned that we have been spending too much time on our own internal affairs. But perhaps that is necessary and, once the Lord Chancellor is not in our midst, something has to be done regarding the titular head of this place. The Lord President, the noble Baroness, Lady Amos, started to say—and it is in the Motion—that the Committee will be set up,
	"with full regard to the House's tradition of self-regulation".
	I agree with that, but self-regulation has not had the best of days. Normally, it works better and I hope that this will not be a portent of things to come.
	The noble Lord, Lord Strathclyde, as well as talking about weight and substance, referred to the Lord Chancellor being retained, but possibly being elsewhere. The noble Lord was worried about taking matters away from the Leader of the House. In every speech, noble Lords have said that we must do nothing to disturb self-regulation. My noble friend Lord McNally mentioned counting fingers—but also trust. There is a sense in which we must trust that this work is continued by the committee of the noble and learned Lord, Lord Lloyd of Berwick, and we look forward to its response.
	The noble Lord, Lord Williamson of Horton, said that the Lord Chancellor is still here. I say that you never know. We have heard that there is a chance that Mr Blair might give up and Mr Brown might be on the scene. He may have different ideas about the disposition of those he wishes to assist him. So we need to be ready if that is the way things go.
	I have noted that there have been 18 speakers and one is tempted to say a word or two about each of them. We do not need that today.

Noble Lords: Hear, hear!

Lord Shutt of Greetland: Therefore, I shall put that on one side. I should not have made any notes about that lot.

A Noble Lord: Read Hansard!

Lord Shutt of Greetland: There are three elements to this matter. Reference has been made to residence—that is of some interest and will be of interest to the person who is appointed—the size of the entertainment allowance, which is a significant matter, and salary. But those are not the most important issues. The role of the job is. I am delighted that most of the members of the committee have heard this debate and that is important for their deliberations. So that role, and what Speakers must not do, is very important.
	Secondly, the committee's work is important. The report that was referred to earlier and was completed some time ago, is important, but, in a sense, that was a tentative document and was not for real. Now, the committee has been asked to do something for real. Although it has not been mentioned much during this debate, the nature of the Speaker and the role of the Chairman of Committees need to be examined very carefully, to see whether there shall be one job or two.
	Thirdly, the title is important. "Lord Chancellor" is historic and has been distinctive. I do not think that "Lord Speaker" has any particular merits and there could be confusion, given that the word "Speaker" is used in the other place. I hope that the committee will be inventive. It could talk about a Lord Guardian or a Lord Companion; those could be titles. I shall not frank them for now, but the Committee should be inventive and suggest a name that is very much House of Lords, and which, we hope, will be seen in the country as that of the titular head.
	We wish the Committee well. The noble Baroness, Lady Amos, said that this is decision time, but it is actually only the little tiny decision to set up the Committee. The decision time will come some time after we have all had our Christmas pudding. In the meanwhile, we wish the work of the noble and learned Lord, Lord Lloyd of Berwick, and his committee well.

Lord Cope of Berkeley: My Lords, this has been an interesting and valuable debate in the best traditions and customs of your Lordships' House. I believe that to preserve these traditions and customs it would be better not to change our arrangements. We are happy with the Lord Chancellor on the Woolsack, as our predecessors have been. After all, our predecessors elected for that to happen when they passed the Standing Order that lays down that it is so. Admittedly, that was a while ago—1660—but until we amend Standing Order 18, the Lord Chancellor is required to sit and the Motion today does not amend the standing order.
	I think we are all delighted that the present noble and learned Lord the Lord Chancellor has expressed himself happy to continue. But we are also all aware that since the passage of the Constitutional Reform Act it is even more possible that a future Lord Chancellor will be a Member of another place. I say to the noble Lord, Lord Desai, that I believe it would be inappropriate for a Lord Chancellor who is a Member of another place to sit on the Woolsack, even thought I acknowledge the point made by noble friend Lord Onslow that it would not, strictly speaking, be impossible. He would not be ineligible.
	But I hope that if the Lord Chancellor comes from another place, that will not mean that there is only one Peer in the Cabinet. On that, I am not quite so gloomy as my noble friend Lord Elton. I do not regard it as necessarily inevitable and I hope that the noble Baroness the Leader of the House will be able to reassure us on this point when she replies in a few moments. If the Leader of the House were the only member of the Cabinet from your Lordships' House, it would place an even heavier burden on the holder of that office.
	In the circumstances in which we find ourselves, and recognising the sudden and unpredictable nature of government reshuffles, it is right to consider what we should do if a future Lord Chancellor were not available to sit on the Woolsack. Some people want a person of less seniority, but more power. That is not usually the way things work, but that seems to be what is asked for here. Much has been said about the desirability of self-regulation. Stated as a general phrase, we are all in agreement with that and I am delighted that today's Motion supports it strongly. But this debate has shown that we need to think carefully about exactly what the attributes of self-regulation are, because it is a delicate flower.
	Like some other noble Lords who spoke earlier today, I warn against the phrase "the guardian of the Companion to the Standing Orders". That phrase was used in the Select Committee report, but like several other noble Lords who have spoken, I believe that it is incompatible with true self-regulation. Self-regulation essentially means that we are all guardians of the Companion, not one Peer especially. In our conduct, each of us should seek to follow the Companion and each of us should also try to ensure that other noble Lords do so.
	I acknowledge at once, particularly to the noble Lady, Lady Saltoun, that whips, and especially chief whips, have an important duty here. I try to discharge it, and the Front Benches do generally. But I think that it is the duty of us all.
	Of course from time to time a Peer may stray from the Companion's directions in one way or another, either from inadvertence or by getting carried away with the enthusiasm of the cause that he or she is espousing at the time. But it is essential for good order that they are courteously encouraged back to correct usage by another Peer—usually either a Member of the Front Bench or a senior Peer. When I first arrived here a few years ago the late and much lamented Lord Malcolm Shepherd was particularly good at steering recalcitrant Members back into order.
	As I say, we are all the guardians of the Companion. That is how it should be if self-regulation is to be the rule. If the Peer on the Woolsack, whatever he or she is called, becomes the sole or even the principal guardian of the Companion, the duty to intervene will fall on him or her. If another Peer thinks that a transgression is taking place at some point, he will suggest to the guardian that this is so. In other words, he will raise a point of order.
	I thought that the noble Lord, Lord Carter, put the matter well when he said that there is no point of order in the House of Lords because there is no one to give a ruling. If you make the Peer on the Woolsack the guardian of the Companion, he is the person who will have to give the ruling and that is the introduction of the point of order.
	There has been a lot of discussion in the debate about what we seek to avoid in connection with references to another place, in which I sat for a good many years. Visitors frequently remark on the pleasant contrast between the two ends of the corridor. The worst feature of the behaviour in another place is often said to be—as has also been said this afternoon—points of order, particularly of course bogus points of order. I do not think that there is any group in your Lordships' House keener to avoid that feature spreading here than those of us on every side who were previously Members of another place.
	It is important to realise that the reason points of order are made to Mr Speaker, and the reason he or she has to listen to them, is exactly because Mr Speaker is the guardian of the Standing Orders in another place. If we make the Peer on the Woolsack the guardian, we create points of order. That is to step on to the downward slope towards a presiding officer, like Mr Speaker; indeed, I think it is to grease the slide.
	In holding out, as the Motion does, for the primacy of self-regulation, we may seem to be swimming against the tide of modernisation. In every sphere of life it seems that we have to have regulators to control activity. Regulation is one of the growth industries. Wherever there is a regulator, those regulating push against the regulations and sail as close to them as they possibly dare. For that reason, regulations, as we know every day, are constantly being refined, extended and so on.
	If holding out against the onward march of regulators looks old-fashioned, well, so be it; we should do so with enthusiasm as an example to others of self-regulation and that vital attribute, self-discipline. As a matter of fact, I do not think that we should be swimming against the tide, we would be in fashion because there is, these days, much emphasis on respect. What we are arguing for is exactly that respect for our fellow Peers which should come from each of us and not be imposed on us by a regulator.
	So, in not having an equivalent of Mr Speaker we would be in the van of current thought: schools need to instil self-discipline; professions need to encourage it. We should not go the other way and give up the power of all of us Peers to guard our own Companion and to guard our own customs.
	I also tentatively suggest to the Select Committee that we should emphasise in other ways that whoever sits on the Woolsack is our peer—our equal—not our regulator. Take, for example, the name. Like the noble Lord, Lord Barnett, I fear that if the new appointee is called the Lord Speaker, he or she will tend more and more, as time goes on, to be treated like Mr Speaker. I prefer the individual to be called the Lord Chairman, but there are other possible suggestions.
	On dress, the Select Committee suggested that there should be a gown. But that is to follow the legal dress code. The Lord Chancellor wears the robes that he does because of his judicial functions; they are the same wig and robes as those of the heads of the divisions of the civil courts. For many years, Mr Speaker has worn the same robes. Such a gown would imply that the Peer on the Woolsack was, like him, a dispenser of the law—or, rather, of the Companion. I suggest that the Lord Chairman, when accompanying the Mace in procession or representing us on great occasions in Westminster Hall or overseas, should wear the parliamentary robe that we all wear for the State Opening. He or she could put the robe aside later in the day, when relieved from the Woolsack after Questions. That would emphasise that all Peers are equal, as the noble Lord, Lord Phillips, said and as we are all told, but also give the appropriate dignity—a dignity borrowed from all of us because it would be the same robe that we all wear.
	The Select Committee also drew attention to the difficulty of the Clerks advising the Lord Chairman when trying to deal with a situation. It suggested electronic communication—that is possible, presumably—and that that was preferable to rearranging the Chamber. We certainly do not want to do that. Even if only the duty to select Peers at Starred Questions was transferred—a matter of which we are all conscious today—that might mean raising the Woolsack a step or two to improve the view. Otherwise, the Cross Benches over here will miss out. In fact, I believe that the Lord Chairman should remain on the same level as us and should not have such powers transferred.
	My noble friend Lord St John of Fawsley said that the person, whatever he or she is called, should be resident. If the Lord Chairman were the guardian of the Companion, it would be necessary to be resident on the premises. Mr Speaker does so simply because he may be required at any time to come into the Chamber to take over the chair from a deputy and rule on some matter of their Standing Orders. That is another warning to us.
	For all those reasons, but above all for the preservation of self-regulation, which we all want and which the Motion requires, the Lord Chairman should not take from us the sole right to be the guardian of the Companion. If I may put it in a few phrases: long live self-discipline; down with points of order; and power to the Peers, not the Woolsack.

Baroness Amos: My Lords, this afternoon's debate has afforded the opportunity to have a useful exchange of views across the House. I do not intend to reply to the detailed points raised in the debate. Should the House agree to the Motion, those are points that the committee should consider in seeking to make recommendations that would then be put before this House for it to decide on.
	I say at the outset that this is not a party-political issue. There has been a sense from some speakers this afternoon that the Government are in some way trying to force the House to move in a particular direction. That is not the case. The Constitutional Reform Bill has been enacted, and as Leader of the House I have returned to a process that started in 2003. I hope that I made it clear in my opening remarks that I see this as a decision for the House. If the House agrees to the Motion, it will be for the committee to hear the views of Members of this House and then report back to them for a decision.
	A strong thread running through the debate today has been the principle of self-regulation and the importance of the ethos of this House. I could not agree more; it is at the heart of the proposals that I have put before noble Lords today. But this House must have some way of ensuring that self-regulation works. Of course it is the responsibility of each and every one of us, but at the same time the House has vested in me a degree of authority to make interventions at certain points, and the House expects the Whips on each Bench to make interventions. There must be a way of ensuring that self-regulation works.
	It is clear that this House does not want to become like the other place. It does not want a Speaker with the kind of powers vested in the Speaker in another place. That came through very strongly in the first report of the Lloyd committee on the Speakership of this House.
	I do not consider having a presiding officer and self-regulation as mutually exclusive. I certainly do not think that having a presiding officer will take away from the authority of the Leader. Anyone elected by this House would be given pretty short shrift if they sought to move this House beyond the limits that it had agreed. We must remember that very important point.

The Earl of Onslow: My Lords, does the noble Baroness envisage the presiding officer having any powers at all?

Baroness Amos: My Lords, my personal view, which I will put to the committee, is that I would like the presiding officer to take on the functions that the Whips currently fulfil in this House. That is what I think being guardian of the Companion means and it is what I mean when I say that we must have a way of ensuring self-regulation. It is the ethos and feeling of the House that that individual must put in place.
	That is why I say that, if any individual went beyond what the House wishes, the House would make it absolutely clear that that was the case. In that sense, I have absolute confidence that we will not stray into having the kind of Speaker that exists in another place. This House does not want it, and noble Lords would in no way allow any individual to stray into that territory. I have absolute confidence that the Members of this House will work to ensure that that does not happen.
	I recognise the concerns expressed. I have to say that some of the fear is misplaced. But that is precisely why in the Motion I proposed that the committee under the chairmanship of the noble and learned Lord, Lord Lloyd, should look at the detail, report back to the House and then give the House an opportunity to decide.
	I assure noble Lords that more than one Member of this House will be in the Cabinet. Noble Lords know that it is for the Prime Minister to decide who is in the Cabinet. When I was appointed Secretary of State for International Development, there were three Members of this House in the Cabinet. The Government Chief Whip, although he is not a member of Cabinet, has attended Cabinet since 1997. These are matters for the Prime Minister. I would be a very brave woman to stand at the Dispatch Box and make promises on his behalf.
	In my opening speech, I alluded to three issues which I had borne in mind in drawing up the Motion. The first issue is the need for this House to have a strong independent voice. I do not agree with the noble Lord, Lord Phillips of Sudbury. While Back-Benchers in this House are perfectly able to stand up for themselves, there is an issue about this House collectively having a voice and, in particular, collectively having a voice on issues such as public engagement and the standing of this House as a House of Parliament.
	A number of times recently there have been, for example, stories in the press about Members of this House, which have not been party political. Had I, or the noble Lords, Lord Strathclyde or Lord McNally, responded on those issues, it would have been seen as a party political issue rather than an issue of the House of Lords as a whole.
	We are in a changing environment in terms of the way in which politicians and Parliament are viewed. That is why I said that a second issue guiding me was that there is a very strong role that we need to exploit to build public awareness and confidence in Parliament. The third issue that I took note of was the important principle of self-regulation.
	If the Motion is agreed I will of course give more detailed evidence on those matters from my point of view to the committee. I feel very strongly that this House needs to have confidence in itself and confidence in its ability to move on while retaining the elements that are most important to it. I hope that the House will agree the Motion.

On Question, Motion agreed to.

Charities Bill [HL]

Lord Bassam of Brighton: My Lords, on behalf of my noble friend Lady Scotland of Asthal, I beg to move that the House do now again resolve itself into Committee on this Bill.
	Moved, That the House do now again resolve itself into Committee.—(Lord Bassam of Brighton.)

On Question, Motion agreed to.
	House in Committee accordingly.
	[The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES in the Chair.]

Lord Hodgson of Astley Abbotts: moved Amendment No. 35:
	Before Clause 20, insert the following new clause—
	"POWER TO INSTITUTE INQUIRIES
	(1) Section 8 of the 1993 Act is amended as follows.
	(2) At the beginning of subsection (1), insert "Subject to subsection (1A) below,"
	(3) After subsection (1), insert—
	"(1A) The Commissioners may only institute such an inquiry on reasonable grounds and such grounds must be communicated in writing by the Commission within 7 days of the opening of such an inquiry to—
	(a) the persons who are or claim to be the charity trustees of every institution which is the subject of such an inquiry, and
	(b) (if a body corporate) each institution which is the subject of such an inquiry."
	(4) After subsection (6), insert—
	"(6A) In the case of either form of publication determined by the Commissioners under subsection (6) above, the Commissioners shall allow the persons who are or claim to be the charity trustees of every institution which is the subject of such an inquiry to add their own comments to such report or statement provided such comments are not manifestly unreasonable and are provided within such reasonable period as the Commissioners may determine.""

Lord Hodgson of Astley Abbotts: Amendment No. 35 would insert a new clause into the Bill, entitled, Power to institute inquiries. While the new proposal to include the statement of the commission's general duties as outlined in the Bill—in particular, the requirement that the commission must have regard to the principles of best regulatory practice—is helpful, it is suggested that the commission's free-standing power to open an inquiry into a charity should have specific principles expressed as being applicable to carrying out all or any such inquiries.
	In the past, the commission has been in the practice of opening inquiries without giving written notice to the charities affected. It now gives written notice to charities on the opening of an inquiry. Its reasons for opening such an inquiry are often implicitly clear, but we suggest that its obligations on taking such a step should be broadened and made explicit.
	The opening of an inquiry is potentially a damaging matter for a charity. It may well be an occasion on which a charity or its trustees would wish to refer such a matter to the Charity Appeal Tribunal. Indeed, such a decision of the commission is a matter which is expressly reviewable under paragraph 3 of Schedule 4 relating to the tribunal. Because of the potential impact of such an inquiry on a charity, it is very important that charities and their trustees should know why the commission has considered it appropriate to take such a step, not least because it may be possible to dispel concerns quickly and readily, thus avoiding potential further damage to the charity. This amendment would ensure that charities are notified of why the commission has taken the step to initiate an inquiry, and surely this is a desirable feature.
	Subsection (4) of the amendment could be described as the "right to reply" provision. Amendment No. 48, tabled by my noble friend Lord Swinfen, covers some of this ground and I apologise if I am stealing his thunder. It has been brought to our attention that to date the commission has been in the habit of producing reports ex cathedra, with the charity or individuals who are the subject of the report having no prior view of what is said about it or them. Not only is that clearly unsatisfactory, it is also at odds with modern administrative practice. No doubt some lawyers would argue that it is in contravention of the ECHR.
	Too often we are told that such reports contain not just errors of misinterpretation, but straightforward errors of fact. Surely it is in everyone's interest that these reports should be factually accurate and that the charities or individuals concerned should be able to add reasonable comments on the qualitative conclusions reached by the inquiry.
	According to the Government, a key strategy objective behind the Bill is to maintain public confidence in the charitable sector. This is most likely to be achieved if the reports of inquiries are as consensual as possible. The commission is to gain significant powers under the Bill, and this new clause would be a useful check and balance. I beg to move.

Lord Bassam of Brighton: Section 8 of the 1993 Act gives the Charity Commission the power to open an inquiry into a charity or group of charities and to publish a report or statement following such an inquiry. The opening of a Section 8 inquiry gives the commission access to other powers under the 1993 Act in respect of the institutions or persons that are the subject of the inquiry. The commission's policy is normally to inform all charity trustees and relevant officers of the decision to open an inquiry under Section 8 of the Act. A standard letter is sent to all trustees on the opening of an inquiry.
	On the rare occasions when notification to the trustees of an inquiry opening needs to be delayed for a short time, the commission's policy is that this decision is made by a senior inquiry manager and noted on the files. This may be done on the rare occasions when there has been real suspicion of continuing criminal activity, typically fraud or child abuse, and the commission has not wanted to prejudice its inquiry or a possible police investigation. Examples include cases where steps need to be taken to protect assets, where the commission is working in partnership with the police and does not want to alert the charity at that time, or where data protection matters relating to a particular individual need to be resolved before others are notified.
	The first part of Amendment No. 35 would require the Charity Commission to open a Section 8 inquiry on reasonable grounds and to communicate those grounds within seven days only to those who are subject to the inquiry. We do not accept the amendment. First, the Bill places the commission under a duty to follow best regulatory practice, which includes the principles under which regulatory activities should be proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed. Therefore the commission must have reasonable grounds for opening a Section 8 inquiry.
	Secondly, there are circumstances in which it would not be appropriate for the commission to provide notification of the inquiry and the reasons for its decision to open it; for example, in cases where serious allegations have been made which may at some point lead to a criminal investigation and prosecution or the use of the commission's protective powers. In such cases, providing notification of the inquiry to those involved could be entirely counterproductive and hamper the conduct of the inquiry and any subsequent criminal investigation or use of the commission's powers to protect the charity's assets.
	The second half of Amendment No. 35 and Amendment No. 48—to which reference has been made already and which we will debate later—would mean that those who are the subject of a Section 8 inquiry would be able to append their own comments to the commission's report or statement. On this point I refer your Lordships to the answer that I gave during the previous Session, in Grand Committee on 14 March this year, in response to Amendment No. 135 (Hansard, col. GC 440). Essentially, we do not agree that the amendment is necessary or desirable for the following reasons.
	First, it is the commission's normal practice to give persons affected by a Section 8 inquiry the opportunity to make representation to the commission before it finalises and publishes its statement on the inquiry and decides on what, if any, further action is to be taken. However, the commission's statement does not purport to be a consensual summary of the inquiry—it is the statement of the regulator.
	Secondly, the commission has a duty to ensure that the statements it publishes about its inquiries are factually accurate and are not defamatory. As has been discussed at length, the Bill also places the commission under a duty to follow best regulatory practice in performing its functions. This would include the conduct of a Section 8 inquiry and its report of that inquiry.
	Finally, anyone affected by an inquiry is at liberty to publish their own account of it, and they would not expect to have to append the comments of the Charity Commission to such an account.
	For those practical reasons and, in extreme cases, in order to protect the interests and assets of the charity involved—and also in the interests of possible criminal proceedings to be taken in the future—I hope that the noble Lord, Lord Hodgson of Astley Abbotts, will see the force of our argument and understand why, although in some senses it may appear desirable, his amendment is not acceptable and we cannot take it on board.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister for the robust and full reply with which he has opened the batting today.

Lord Bassam of Brighton: I hope that we can bowl along with this.

Lord Hodgson of Astley Abbotts: Whichever way, the Australians are doing rather well at the moment, I fear.
	We accept that it has been the normal procedure for the charity to be told but we are seeking to make it explicit that the statement has to be made. Reference has been made to the fact that individuals have not always been allowed to comment on reports that affected them and that some factual inaccuracies could have been corrected. It is obviously an issue on which people will wish to comment following today's debate.
	I have some difficulty with the issue of prejudicing criminal investigations. We have not said that this has to be done in advance but within seven days. Once the Charity Commission and the police are probing around it will become fairly apparent that something is going on. I have some difficulty in seeing how what we are suggesting will prejudice those kinds of investigations.
	I will take on board the Minister's points and reflect further on them. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts: moved Amendment No. 36:
	Before Clause 20, insert the following new clause—
	"REASONS FOR APPOINTING A RECEIVER/MANAGER OF A CHARITY
	In section 19 of the 1993 Act, after subsection (1), insert—
	"(1A) Within seven days of an appointment under subsection (1), the Commission must communicate in writing to—
	(a) the persons who are or claim to be the charity trustees of the institution concerned, and
	(b) (if a body corporate) the institution which is the subject of such an appointment;
	the reasons why they consider such an appointment necessary and appropriate.""

Lord Hodgson of Astley Abbotts: The amendment seeks to insert a further new clause at the same point in the Bill. The proposed new clause is headed,
	"Reasons for appointing a receiver/manager of a charity".
	I am grateful for the support of the noble Lord, Lord Phillips, who, I am sure, will speak much more ably to this than I shall be able to.
	The amendment has been prepared with the advice of the Charity Law Association. The power to appoint a receiver and manager of a charity is arguably the most contentious of all the powers available to the commission after it has opened an inquiry into a charity. Recent cases such as that of the Kingsway International Christian Centre have indicated how contentious this step is, with the supporters and trustees of charities feeling that "their" charity has been taken away from their control.
	Accordingly, in accordance with the principles of best regulation, it is suggested that the commission should be required to communicate in writing the reasons why they thought it appropriate to make an appointment of a receiver and manager. The power to make such an appointment, in any event, only arises under Section 18 of the Charities Act 1993 where, at any time after the commission has opened a Section 8 inquiry, the commission is satisfied that,
	"there is or has been any misconduct or mismanagement in the administration of the charity . . . or that it is necessary or desirable to act for the purpose of protecting the property of the charity or securing a proper application for the purposes of the charity of that property or of property coming to the charity".
	It would be helpful and assist transparency if the commission could be required to explain why it has taken such a potentially very serious step. It also ticks an important box to which we have regularly referred regarding what should be one of the main concerns of the commission—that is, to ensure continuing communication between the commission and the charitable entities that it regulates. If the Bill ensures that the commission has full accountability and interaction with the third sector, it will have achieved a major part of its purpose. I beg to move.

Lord Phillips of Sudbury: The noble Lord, Lord Hodgson of Astley Abbotts, has, as usual, put the case succinctly and clearly. The only point I wish to make in addition is to emphasise what has been said about the appointment of receivers and managers to a charity, which can be utterly devastating. There have been a number of examples over the past two years of charities which have suffered—and I use the term advisedly—a financial disadvantage consequent upon the appointment of a receiver and manager—and not only in terms of their fees, but generally—in excess of seven figures. As all the costs have to come from the charity's assets, it can completely derail a charity's purposes and activities.
	Of course, the commission will not put in a receiver and manager unless it believes that there are good and weighty grounds why that should be done in the interests of the charity. None the less, to take that step without the trustees and charity knowing why it is being taken is rather like arresting someone and taking him before a court without telling him of what crime he is accused. This is the civil equivalent of someone charged with a criminal offence knowing what it is all about. It is not as technical as that, but the amendment would give the trustees the ability to adjudge what it is that the receiver or manager will be particularly looking at.
	It is a thoroughly sensible and fair amendment. Given the spirit with which the Government have accepted earlier amendments, I hope that they will accept this one in principle if not in terms of its wording.

Lord Swinfen: The noble Lord, Lord Phillips of Sudbury, referred to the issue of the cost to the charity. At the other end, the appointment of a receiver or manager could very often make it virtually impossible for a charity to raise the necessary funds to undertake its charitable work. My noble friend's amendment is extremely sensible. I cannot see a good reason why the Government should refuse it.

Lord Bassam of Brighton: I have listened very carefully to the comments of the three noble Lords who have supported the amendment. We are not a million miles apart in what we expect the law to do. However, we have to consider carefully what receiver and manager appointments are all about and what they are a part of.
	In general terms, I am sure that noble Lords will accept that in most cases—and these cases do not arise very often, thankfully—this approach is adopted for very good reasons. When the Bill was in Grand Committee during the last Session I said that the appointment of a receiver and a manager—to be known as an "interim manager" under the Bill—is action undertaken by the commission only where it is absolutely necessary and in the bests interests of the charity to do so.
	It ought to be remembered that in order to appoint a receiver and manager under Section 18(1)(vi) and in accordance with Section 19 of the 1993 Act, the commission must first open an inquiry under Section 8 of that Act. It must have good reason to do so, particularly now that the Bill places it under a duty to carry out its functions with due regard to the principles of what the noble Lord, Lord Hodgson, described as best regulatory practice, which is what it should be.
	The grounds on which the commission can make such a decision to appoint a receiver and manager are limited to cases where the commission is satisfied that there is or has been misconduct or mismanagement—both of which are pretty profound for any charitable organisation to suffer—in the administration of the charity, or that it is necessary or desirable to act for the purposes of protecting the property or assets of the charity, or securing the charity's property for the proper application of the charity's purposes. As I said, such cases are rare.
	In some cases notification and giving the reasons for exercising the power would not be in the best interests of the charity, particularly where assets are at risk. We discussed those sets of circumstances in earlier debates. Except when it would prejudice an inquiry into a charity, it is the commission's usual practice to inform the trustees within a reasonable time-frame why it has taken any significant action using its powers of investigation and remedy. In most cases, the commission will advise the trustees and take them carefully through the process, explaining exactly why the strategy has been adopted.

Lord Swinfen: The Minister used the term "reasonable time-frame". How long is that?

Lord Bassam of Brighton: In most circumstances, we would be talking about a matter of days. However, the commission has to consider what is reasonable in the circumstances. It is in the spirit of the way in which the commission works that its members would want to conduct these things at a fair pace so that people have some certainty and proper understanding of why particular actions have had to be adopted.
	It is also the case that trustees will be given information about how to ask the commission formally to review a decision which it has made and about statutory rights of appeal. The commission's usual practice when appointing a receiver and manager is to inform the trustees on the day of the appointment and to ensure that reasons are given for that appointment. It is the usual practice that, on the day on which an appointment is made, trustees will be informed and the process will be explained to them. That is best regulatory practice. In addition, the reasons why a receiver and manager were appointed will be included in the inquiry report. It will be set out in no uncertain terms.
	The current legal framework allows the commission to inform trustees in accordance with its usual practice, as I have described above, while providing flexibility for the particular cases when the commission must have discretion to act in the best interests of the charity. It is usually the case that trustees are informed on the day and in extreme circumstances in a matter of days, and in any event reasons will have been set out and carefully explained to those trustees. That is why I said that, in spirit, there is not a great deal of distance between us. However, because of the need to protect the charity—its assets and property and the way it is managed—we do not think that we can accept this amendment.

Lord Phillips of Sudbury: The Minister said a minute ago that the grounds for putting in a receiver or manager will be made explicit in the inquiry report. Of course, that is all very well, but that is after everything is done and dusted. The trustees of the charity want to know at the beginning.

Lord Bassam of Brighton: I also said that on the day of the appointment trustees will be advised and will be given reasons for the appointment. It is there at the outset and at the conclusion.

Lord Phillips of Sudbury: I am coming to that. The noble Lord went on to say that they will be told at the Beginning, or quickly, unless there is a good reason otherwise. That is the point. I would concede that this amendment should have latitude for the commission not to inform the trustees of the company if they would be prejudiced to the appointment of the receiver and manager in so doing. Amendment No. 39, which we are coming to in a minute, states:
	"Unless to do so would prejudice the purpose of the order concerned".
	If one had a similar caveat here, one has the spirit of the amendment in a way that meets the one good point that the Minister is making.
	However, it is not fair that we have been driven to legislating detailed statutory stuff in relation to charity law with all the rights on the one side. We have the entitlement of the commission to do this and that, how it does it and why it does it, but when it comes to the issue of the protection of the trustees of the charity we say, "Well don't worry old chap because normally this is what we do".
	At this juncture in the Bill, which runs through vast numbers of pages and schedules, the rights of the trustee and the charity need to be expressly included. This is not a "way out" right. It is fundamental that the trustees should know what is alleged against them unless telling them would, to give the Minister's example, endanger charitable assets. I agree that there is not much distance between the noble Lord, Lord Hodgson, myself and the Minister, provided that that change can be made. It is obvious that we cannot do it here and now, but there is no reason why it should not be done prior to the next stage.

Lord Hodgson of Astley Abbotts: I accepted the Minister's strictures on Amendment No. 35, but I thought that those on Amendment No. 36 were slightly weaker. To say that this is usual practice or best practice on one side and have statutory requirements on the other is not a fair balance. Clearly, we do not want to be in a position where we prejudice charitable assets. However, in the situation that the Minister raises with us—that a set of trustees is playing fast and loose with charitable assets—if the communication has to be made within seven days of an appointment, and within those seven days the receiver manager has not secured the assets, he has not done his job very well.
	We had the opportunity to include seven days to button things down and after that period the individuals involved had to be told. I do not find the Minister's answer very satisfactory and we may want to return to the amendment at a later date. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 20 [Power to give specific directions for protection of charity]:

Lord Hodgson of Astley Abbotts: moved Amendment No. 37:
	Page 20, line 13, leave out from "which" to the end of line 14 and insert "is necessary for the protection of the property of the charity"

Lord Hodgson of Astley Abbotts: This amendment concerns the directions of the commission. The amendment deals with Clause 20. Subsection (2) of this clause specifies that the commission may direct charity trustees and employees to take action,
	"which the Commission considers to be expedient in the interests of the charity".
	The amendment replaces the last part of this subsection so that rather than the commission determining when the charities must take action when it—the commission—considers it to be expedient, it is determined by when it,
	"is necessary for the protection of the property of the charity".
	The amendment was brought to our attention by the Law Society and we believe that it is justified in thinking that it helps to ensure that the Charity Commission does not become involved in the administration of charities.
	The principle has long been established and is maintained in this Bill that the commission should not have the power to act in the administration of a charity. This clause, as drafted, would allow it to do so, albeit when it considers it expedient in the interests of the charity. Currently, that expression is used in the context of a test which must be used when deciding whether to confer powers on the trustees at the request of the trustees of a charity. This power substitutes the commission's decision for the decisions of the trustees and, if to be conferred at all, should be conferred only when it can be demonstrated that it is necessary for the good of the charity that that should be done. It should not be for the commission to determine that a course of action is in the interests of the charity in place of the trustees. I beg to move.

Lord Bassam of Brighton: Subsection (1) of new Section 19A allows the commission to give a direction, once it is satisfied,
	"as mentioned in section 18(1)(a) or (b) above".
	That means that the commission may act, once it has opened an investigation and has satisfied itself either that there has been misconduct or mismanagement in the charity or that the charity's property is at risk and action is needed to protect it.
	As the Bill is drafted, the commission may direct the taking of an action that is expedient to the interests of the charity. The noble Lord's amendment would limit the commission to directing an action that was necessary to protect the charity's property. The practical effect of the amendment would be to prevent the commission from giving a direction that was actually in the charity's best interests and was aimed at remedying some misconduct or mismanagement when there was no risk to property. For example, when the misconduct was towards one of the charity's beneficiaries, trustees or employees, but there was no risk to any of its property, the commission could not in practice use the power.
	If the noble Lord could reassure me that he had identified every possible circumstance when there was misconduct towards a beneficiary but no risk to property and had satisfied himself that the commission could deal with the problem using one of its other powers, in those circumstances I might just begin to look kindly on the amendment. In the mean time, I must ask the noble Lord to withdraw it.

Lord Hodgson of Astley Abbotts: The concern with the present drafting of the last part of subsection (2) of new Section 19A is with the use of the words, "considers to be expedient". That is a fairly loose test for the commission to have to meet. We have been dealing with the question of safeguarding the assets of charities. There may be aspects relating to beneficiaries and others that need taking into account, but the drafting gives the commission undue latitude.
	I shall think again whether I can meet the level of the high jump bar that the Minister has set me, but in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton: moved Amendment No. 38:
	Page 20, line 27, leave out "so done" and insert "which has been done under the authority of such an order"

Lord Bassam of Brighton: In moving Amendment No. 38, I speak also to Amendment No. 40, in the name of my noble friend Lady Scotland of Asthal. The amendments have no legal effect and are there purely to improve the clarity of the drafting. The change has been suggested to us by the parliamentary draftsmen. I cannot give more explanation than that for the amendment—but it is good news that we are improving clarity. I beg to move.

Lord Phillips of Sudbury: Hear, hear.

On Question, amendment agreed to.

Lord Phillips of Sudbury: moved Amendment No. 39:
	Page 20, line 27, at end insert—
	"( ) Unless to do so would prejudice the purpose of the order concerned, the Commission shall, as soon as practical, give a copy of the same to the charity itself (if a body corporate) or to one or more of the charity trustees on behalf of all of them.""

Lord Phillips of Sudbury: The amendment would insert a new subsection at the end of new Section 19A, which Clause 20 inserts into the Charities Act 1993. The new section is headed,
	"Power to give specific directions for protection of charity".
	It is an important clause. I beg to move.

Lord Bassam of Brighton: It may be helpful if I advise the noble Lord that I am happy to take the amendment away for consideration.

Lord Phillips of Sudbury: That is a most timely interjection. As long as the Minister's consideration is in a positive direction, as I hope that it will be, I am a very happy chappie. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 20, as amended, agreed to.
	Clause 21 [Power to direct application of charity property]:

Lord Bassam of Brighton: moved Amendment No. 40:
	Page 21, line 11, leave out "so done" and insert "which has been done under the authority of such an order"
	On Question, amendment agreed to.
	Clause 21, as amended, agreed to.
	Clauses 22 to 25 agreed to.
	Clause 26 [Power to enter premises and seize documents etc.]:

Lord Phillips of Sudbury: moved Amendment No. 41:
	Page 26, line 28, after "must" insert "before leaving the premises (unless impractical)"

Lord Phillips of Sudbury: Amendments Nos. 41 and 43 in this group are in my name; Amendment No. 42 is in the name of the noble Lord, Lord Hodgson. I nearly called him my noble friend—this is getting too chummy.
	The amendments are all to do with the power to enter premises and seize documents, included in Clause 26, which contains a new Section 31A to come after Section 31 in the Charities Act 1993. The power to enter premises contains warrants for entry and search. The two amendments in my name are practical and limited but useful. Subsection (6) of the new section says that the authorised person—that is, the person executing the warrant—is required to make a written record of the date and time of his entry; the number of persons with him; the period that he spent on the premises; and what he did on the premises and so on, but especially with any document or device of which he took possession while there. My amendment would add the words that that person must do all that,
	"before leaving the premises (unless impractical)".
	Similarly, Amendment No. 43 alters subsection (7), which states:
	"If required to do so, the authorised person must give a copy of the record to the occupier of the premises or someone acting on his behalf".
	That is sensible and fair, but I would insert the words that the authorised person must give a copy of the record,
	"before leaving the premises (unless impractical)".
	Again, it is obvious that the two amendments are designed to ensure that such things are done contemporaneously, so that the record will be more accurate and—more to the point—checkable by the person requesting a copy of the records concerned. I hope that the amendment will find favour with the Government, as it is a balancing provision designed to make the powerful new entitlements fairer to the person whose premises are proceeded against. I beg to move.

Lord Hodgson of Astley Abbotts: I have an amendment in this group—Amendment No. 42. However, before speaking to it, I must say that I support what the noble Lord said about his amendments and the timing of the whole matter.
	We discussed these draconian powers at an earlier Committee stage of the earlier Bill, on 14 March. I am extremely grateful to the Government for having accepted the spirit of those earlier amendments. Subsection (6) of the new section requires that the,
	"authorised person must make a written record of—
	(a) the date and time of his entry on the premises;
	(b) the number of persons (if any) who accompanied him . . .
	(c) the period for which he . . . remained on the premises;
	(d) what he . . . did while on the premises; and
	(e) any document or device of which he took possession while there".
	Subsection (7) qualifies that by saying:
	"If required to do so, the authorised person must give a copy of the record to the occupier of the premises or someone acting on his behalf".
	We wonder whether the wording of the subsection is sufficiently direct. My amendment would rewrite it so that it stated:
	"The authorised person must supply a signed copy of the list to the person from whose possession it was taken or who is acting on behalf of the occupier, or where the premises are unoccupied must leave a record on the premises".
	That would ensure that a written record would not only be made but handed over to the relevant person when entry was made to premises and documents seized. As drafted, the Bill would not require that such a record be handed over.
	There is a statutory obligation proposed by the Bill that all the documents removed must be returned as soon as reasonably practicable, and if no proper record of what is removed is handed over there may be uncertainty and difficulties in causing them properly to be returned under this provision. This is of particular concern where the items removed—computers or disks, for example—contain information about other organisations or the personal and private business of the owner which could be of no possible relevance to the commission's concern but of considerable importance to the owner.
	It is also quite possible that when items are removed, a person, such as a security guard, acting on behalf of the occupier will have no knowledge that they are entitled to ask for a written record of items taken. For all these reasons we believe that it is not merely desirable but essential that there should be evidence of the items removed by the commission, given at the time to the relevant person, so that it will remain properly accountable for its stewardship of the property taken.
	We propose that there should be a provision that a copy of the list should be handed to the person in charge of the premises from which they were removed by the member of the commission's staff responsible for so removing them.
	I conclude by saying that we are returning to transparency and accountability. As has been much discussed—and as indeed the noble Lord, Lord Phillips, said—the commission's powers are being significantly increased, and an increase in power needs to be balanced by an increase in accountability. This amendment would achieve this balance and I hope that the Government can see the force of it and will be able to accept it.

Lord Swinfen: This is an eminently sensible amendment. It could be for the protection of members of the Charity Commission and its staff, because if a proper record is given it can refute any suggestion that it has removed documents or property that it has not done. It can also be a check on whether it has removed, for instance, a personal laptop computer that does not belong to the charity and is on the premises only because it happened to be on the way from the shop to the individual's home, or on the way from the individual's home to, for instance, where he was going to stay at the weekend to show pictures of grandchildren to the grandparents.
	I wonder whether in subsection (6), as well as giving the number of persons who accompanied the individual on to the premises, the names should be given at the same time, so that there could be no dispute later as to who was or was not there.

Lord Bassam of Brighton: I want to be helpful in this. I thank the noble Lords, Lord Phillips and Lord Hodgson. I thank the noble Lord, Lord Swinfen, also for his point on identification.
	Clause 26 provides the commission with an important new power to enter premises and seize documents and information under a warrant issued by magistrates. I have done enough of these sorts of debates on lots of other Bills to alert me to the general concern that your Lordships' House always—quite understandably, quite rightly—expresses in these circumstances. In our scrutiny of the Bill during the last Session we spent some time debating this new power—to which I think the noble Lord, Lord Phillips, alluded. The noble Lord, Lord Hodgson, made that point too. As a result we included in the reintroduced Bill several safeguards to the provision, and made other improvements to it.
	Clause 26(5) provides that the person authorised to conduct the entry and seizure must, if required to do so, produce the warrant and documentary evidence that he or she is a member of the commission's staff. Subsection (6) provides that the person authorised by the commission to carry out the entry and seizure must make a record containing details about that entry and seizure, including information about any documents or devices of which he or she took possession. Subsection (7) provides that a copy of this record must be given to the occupier or a representative if that is so required.
	I noted the comment made by the noble Lord, Lord Swinfen, that perhaps under subsection (6) names should be recorded or provided of who was conducting the seizure and we will give that some thought. The reason that this clause gives the occupier the right to ask for these things rather than putting the commission member under a duty to provide them without being asked, is that the commission member may not know who the occupier is. The point here is that the occupier of premises means the person legally entitled to occupy them, for example as a freeholder or under a lease or licence. It does not mean the person or persons who happen to be there when a member of the commission staff enters. The commission may not know or be able to find out who the legal occupier is—as is often the case, particularly in the case of powers exercised by other agencies.
	If it does not know who the legal occupier is, it is not reasonable to place the commission under a duty to produce something to the occupier. The Bill as drafted leaves it to the occupier, or to someone acting on his behalf, to identify him or herself and require the production of the documents.
	These amendments would ensure that persons authorised by the commission to conduct the entry and seizure give a copy of the record to the occupier or to someone acting on the occupier's behalf before leaving the premises. Amendment No. 42 goes further by requiring a copy of the record to be left on the premises should they be unoccupied.
	As drafted, these amendments are not acceptable to us because we would want to be sure that the requirements were capable of being put into effect; it is a practical consideration. But I have considerable sympathy with the general thrust of the amendments—basically to ensure that a copy of the record is given on request to the occupier or his representative before the commission member of staff leaves the premises, and where it is practical to do so. There may be circumstances in which it is not practical.
	We would like to consider these points further and the point made by the noble Lord, Lord Swinfen, and we may return at Report with an amendment which gives practical effect to what the noble Lords are seeking this afternoon. With that, I hope that noble Lords feel confident enough to withdraw their amendments.

Lord Phillips of Sudbury: I am grateful to the noble Lord and will look forward to what comes out of this. Very briefly, I think that the noble Lord will accept that if I go on to your premises with a warrant and remove documents or devices, as the clause stands it would be sufficient for me to go back to the charity commission and two days later make a record or list. That is not sensible on any basis. All that these amendments seek to do is to put that plainly on the face of the Bill so that there is no slippage on this.
	If you put yourself in the shoes of being a trustee from whose house documents and devices are taken, you want to know that what is taken has been properly logged. The only way that that can occur is if that takes place at the time concerned. The noble Lord made the point that there may be circumstances where one has to override fair process, but we will wait and see and I am grateful for what was said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 42 and 43 not moved.]

Lord Phillips of Sudbury: moved Amendment No. 44:
	Page 27, line 19, at end insert—
	"( ) In section 38 of the 1993 Act—
	(a) in subsection (2) after "loan" insert "or a grant";
	(b) in subsection (3)(b) after the second "loan" insert "or grant";
	(c) in subsection (3)(b) after "loan" insert "or grant";
	(d) in subsection (3)(b) after "borrower" insert "or recipient of a grant";
	(e) in subsection (3)(c) at the beginning insert "in respect of a loan"; and
	(f) in subsection (4)(b) after "loan" insert "or grant"."

Lord Phillips of Sudbury: Amendment No. 44 makes changes to Section 38 of the Charities Act 1993. Section 38 is entitled "Restrictions on Mortgaging" and specifies that no mortgage of land held by or in trust for a charity shall be granted without an order of the court or of the commissioners. Section 38(2) says that that general requirement shall not apply to a mortgage by way of security for the repayment of a loan where the charity trustees have obtained proper advice. That is very sensible. That covers typical banking arrangements.
	"Proper advice" is defined in Section 38(4) as the advice of someone,
	"who is reasonably believed by the charity trustees to be qualified"
	to give that advice, and
	"someone who has no financial interest in the making of the loan".
	Those are standard arrangements which are very important for the working of charities.
	Since 1993 some of the great grant-making agencies—I think, for example, of the Millennium Commission—rather surprisingly, your Lordships may think, require a formal charge on land of a charity to which they are making a grant, not a loan, just in case some of the conditions attaching to the loan are breached, so that in extremis, if there is a breach of a condition attached to a loan, they then have the right to recoup the loan. Then, belt and braces, they take out a charge so that if at the time concerned the charity is not "flush", they can realise land to meet the recoupment. Some may think that that is all somewhat bizarre.
	The problem is, first, that this is a fairly general provision. Secondly, it is not confined to the Millennium Commission. Thirdly, if you have to go through this rigmarole—that is to say, you cannot rely on the exemption given in Section 38 of getting advice from someone qualified to give it—you are then involved in the huge expense of taking a formal legal charge and instructing lawyers on both sides of the transaction. The recipient charity will probably have to pay the costs of the charity making the grant.
	I give an example, which was dealt with in my office not so long ago, concerning the Eden Project down in the West Country, which received a grant from the Millennium Commission. The legal costs regarding the charge that is being insisted upon is likely to be of the order of £2,000 to £3,000 on both sides. That is a nonsense. I believe that the making of a grant ought to come within the provisions of Section 38; that is, where you can act upon proper advice. I am sorry to have explained that at some length but otherwise it would be completely incomprehensible. I leave it at that. I beg to move.

Lord Bassam of Brighton: I am grateful to the noble Lord for the lengthy nature of his introduction to the matter. I shall not chastise him for giving a cogent explanation; it seemed to me entirely sensible. We have much sympathy with what the noble Lord had to say. We would like to take the matter away and give it fair consideration as the noble Lord highlighted a particular problem. We believe that the proposal has merit.
	We would also like to tackle another practical problem arising from Section 38. Under Section 38 trustees have to obtain advice covering the prescribed matters before they execute a mortgage—otherwise, they have to obtain the commission's consent. The problem arises when a charity already has a loan whose repayment is secured by a mortgage and wants a further loan. As things stand, the trustees have to execute the mortgage again, after they have taken advice on the further loan. That gives rise to administrative and legal costs for the charity, perhaps in the order of those which the noble Lord, Lord Phillips, mentioned.
	It is common commercial practice for a mortgage to be given to cover further loans as well as the original one. So long as advice covering the prescribed matters is taken again by the charity on any further loan, it does not seem necessary to require that the mortgage should be re-executed every time the charity takes a further loan.
	We would like to deal with both those matters. If the noble Lord, Lord Phillips, will trust us to do that we shall try to bring forward an amendment that is satisfactory to him before the next stage of the Bill.

Lord Phillips of Sudbury: We have trusted the Government thus far and have little cause for complaint. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 26 agreed to.

Lord Swinfen: moved Amendment No. 45:
	After Clause 26, insert the following new clause—
	"NAME OF RECEIVER AND MANAGER
	References to "receiver and manager" in the 1993 Act shall be replaced by the words "interim trustee" or "interim manager" as appropriate."

Lord Swinfen: In moving Amendment No. 45, I wish to speak also to Amendment No. 46. No doubt the Minister will speak to the government Amendments Nos. 68, 69, 70, 71 and 72, which are grouped with these amendments.
	The purpose of Amendment No. 45 is to remove the name "receiver and manager" and replace it with the name "interim trustee" or "interim manager" depending on which of those two roles the appointed person is fulfilling.
	The Government's agreement at the Bill's Second Reading to replace the title "receiver and manager" with that of "interim manager" is welcomed. I am delighted with that. The fact is that a receiver and manager can be appointed to one of two different roles and the use of the same title of "interim manager" for both roles would in my view be misleading.
	In appointing a receiver and manager, the commission may give him very narrow specific duties such as producing accounts or temporarily taking control of a charity's assets when they are in danger. The existing trustees are left in place to continue running the charity while the receiver and manager goes about his limited work. In this case the receiver and manager is acting as a temporary manager with specific duties and the phrase "interim manager" describes his position.
	On the other hand, the commission, in appointing a receiver and manager, can give him such wide powers of control over the charity's affairs that he becomes in effect the charity's trustee under the definition in the 1992 Act. In these circumstances the previous trustees are de facto no longer trustees even though they may not have been the object of a suspension or removal order by the commission. In this case the receiver and manager is acting as a temporary trustee with wide or total control over the charity and the phrase "interim trustee" best describes his position.
	It seems that some receiver and managers and even commission staff have not always understood this trustee role and have even asserted that the previous trustees still had those responsibilities when all their powers to act in fulfilment of those responsibilities had been removed from them. This amendment will not only clarify the two different roles of a receiver and manager but it will make quite clear to commission staff, receiver and managers, charity trustees and charity staff who is in charge and who is not. It will also make clear that receiver and managers in the role of interim trustees will be expected to perform to the standard required of all charity trustees, something which I understand has not always happened in the past.
	The purpose of Amendment No. 46 is to make the Charity Commission responsible for paying its own receiver and managers, and not the charity on which they are imposed. The Charity Commission already has the power to pay its own receiver and managers but usually charges these costs to the charity if it has sufficient assets. It is not in a charity's interests to fund remedial action which has been put in place by an outside agency such as the commission rather than being decided on by the charity trustees. The commission should pay the fees and expenses of any receiver and manager and any consultants appointed to assist a receiver and manager in all cases.
	This amendment runs counter to the arrangements for receivers appointed for commercial companies, but the situation in charities is very different. A commercial receivership is normally the prelude to a winding up whereas a charity receivership is expressly designed to strengthen the charity and enable it to move on. The commission has shown itself to be less than prudent with charity funds when appointing receivers and managers. For example, I am told that in the Voice of Methodism case, a receiver and manager was in post for more than six years at a cost to the charity of £100,000. In the current Cancer Care Foundation case I am advised that the receiver and manager has already run up costs in excess of £600,000 and that these are likely to grow to more than a million pounds, thus completely crippling that charity. In the Kingsway International Christian Centre case, the commission has recently published figures indicating that the costs of such appointments and their consultants to the church charity already total more than £1.23 million and will rise further. The commission's legal authority for appointing a receiver and manager is to protect charity assets. In these cases I believe that it has done the opposite.
	The noble Lord, Lord Bassam of Brighton, said in Grand Committee in the previous Parliament:
	"The appointment of a receiver and manager generally happens when trustees are no longer in control of a charity".—[Official Report, 14/3/05; col. 445.]
	If that were always the case, the Minister's stance would be firmer. The well documented abuse of charities through the appointment of receivers and managers must stop. The amendment would help the new management by forcing the staff, through their budgets, to give more careful consideration to the appropriate circumstances when receivers and managers should and should not be used. But the commission is likely to be much more careful when incurring those costs if it has to find them out of its own pocket. I beg to move.

Lord Bassam of Brighton: I am grateful to the noble Lord, Lord Swinfen, for his explanation and the background to his amendment. As the noble Lord noted in his comments, we debated it in Grand Committee during the previous Parliament. I said then that the Government would bring forward our own amendments to give effect to some of the changes sought by the noble Lord, Lord Swinfen, and others. I hope that in speaking to government Amendments Nos. 68 to 72, the noble Lord will accept that we have achieved the result that he seeks.
	Section 18 of the 1993 Act specifies powers that may be exercised by the commission at any time after it has instituted a Section 8 inquiry. Those include, under subsection (1)(vii), the power to appoint by order, in accordance with Section 19, a receiver and manager in respect of the property and affairs of the charity. Section 19 sets out supplemental provisions in relation to a receiver and manager appointed under Section 18. Subsection (6) contains a regulation-making power and the Charities (Receiver and Manager) Regulations 1992 have effect as if made under that subsection.
	There is a common assumption that a charity to which a receiver and manager has been appointed by the commission is in the process of being wound up. That assumption appears to be based on people's perception of what a "receiver" is. In fact, the purpose of appointing a receiver and manager is in many cases to restore the charity to a position where it can be fully operational again. In such cases, the appointment of a receiver and manager for a charity is undertaken as a temporary and protective measure. The assumption that a receiver and manager appointment is designed to wind up the charity can stigmatise it and may lead to donors and creditors withdrawing their support, or almost as importantly, their goodwill.
	Our Amendments Nos. 68 to 72 would do away with the word "receiver", by changing the term "receiver and manager" in the 1993 Act to "interim manager". That has the benefit of explaining that it is for an interim period, and the function is primarily about management rather than operating as a receiver with all of the connotations of that term. The noble Lord, Lord Swinfen, has made that point persuasively in the past. We do not want to change the legal status of such a person to that of trustee—all that is intended is a name change, to avoid the stigma attached to the word "receiver".
	Amendment No. 68 makes provision to the effect that an "interim manager" appointed under Section 18 is deemed for the purposes of the law in England and Wales to be a receiver and manager appointed by the Charity Commission under that provision. That ensures that the body of existing and future case law and statutory provisions, such as in the Companies Act 1985 and the Insolvency Act 1985, relating to receivers and managers, will continue to apply. Amendments Nos. 69 to 72 make consequential amendments to Section 19(1) to Section 19(4) of the 1993 Act, where there are currently several references to "receiver and manager".
	The change should be welcomed by all. I hope that the noble Lord, Lord Swinfen, will recognise that we have moved in the direction of his original intent and his amendments, and I hope that he will accept that our amendments will achieve the purpose that he seeks. For those reasons, I invite the noble Lord to withdraw his amendment.

Lord Swinfen: I am advised that the microphone that I was sitting near was not picking up what I was saying, but I shall not repeat it, as I do not think that your Lordships would approve.
	I know that the Government have moved some way towards what I want. I will read what the Minister has said, and I may well come back at the next stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 46 not moved.]

Lord Swinfen: moved Amendment No. 47:
	After Clause 26, insert the following new clause—
	"PUBLICATION OF DETAILS OF INQUIRIES
	(1) When the Commission publishes a report under section 8(6) of the 1993 Act, it shall include the dates of appointment and termination of any receiver and manager, the cost of the receiver and manager and any other consultants utilised by the receiver and manager, and which of these costs was borne by the charity and which by the Commission.
	(2) When the Commission publishes a report under section 8(6) of the 1993 Act, it shall invite on 28 days' notice the charity, its trustees and all other affected parties to submit for publication with the report an appendix containing those parties' estimates of the costs to those parties of the inquiry including the cost of consultants, lost time, lost assets, lost income and any other costs.
	(3) The Charity Commission must publish at least annually the number of receiver and manager appointments under section 19 of the 1993 Act and include the name of the charity, the name of the receiver and manager, the dates of appointment and termination of the receiver and manager, the costs of any receiver and manager and other consultants, and whether those costs were borne by the charity or the Commission, the costs of other parties including the charity where submitted, and such summarising statistical data as the Commission considers fit."

Lord Swinfen: The purpose of Amendment No. 47 is to require the Charity Commission to publish the financial and other details of each use that it makes of a receiver and manager, summarising statistical data. When similar amendments were proposed in the Grand Committee considering the previous Charities Bill, the Minister agreed that,
	"the public may have an interest in the number of receivers and managers appointed each year, and the costs of such appointments. The Charity Commission has recently formally decided to make publicly available, on an annual basis, information about cases where a receiver and manager has been appointed".—[Official Report, 14/3/05; col. GC 438.]
	I congratulate the new management at the Charity Commission on taking this step, which is a step forward. But the fact that it takes a debate in this House and public criticism of the commission to bring about this minor lifting of the veil reminds one of how secretive the commission has been in the past. One cannot help thinking that this small voluntary step could so easily be reversed under different management, especially now that the Government have accepted that they will be unable to issue directions to the commission in future.
	The commission's decision does not go far enough; it is too little, too late. We are told that it will voluntarily issue annual statistics, perhaps long after the events of an investigation have taken place. The amendment would require the commission to publish the costs and other details with each case report, as well as annually, so that they can be seen in the context of the investigation. The amendment would also require the commission to publish the charity's costs in addition to the fees of the receiver and manager.
	The Minister expressed concern in Grand Committee that by statutorily specifying what must be included in those reports, it would be difficult to change in the light of experience. This amendment does not preclude the commission from publishing further information, nor does it prescribe the form in which it must be published, nor that the information about live cases must be published. It merely sets a minimum standard. Bearing in mind that such information has not been volunteered in the past, this is a sensible precaution. I beg to move.

Lord Bassam of Brighton: As I have already said, cases where the commission appoints a receiver and manager are rare, and it is often an action of last resort for the commission where the trustees are no longer in control of the charity. That has been agreed by the Committee as the situation; that it is done only in extremis and only where it is really there to protect the public's interest and the interests of those involved in the charity.
	We spent some time in the last Session discussing the requirements on the commission to publish details of its receiver and manager appointments. We have given a lot of careful thought to those appointments, and in essence our position remains the same. The Government agree that the public may have an interest in details of the number and cost of receiver and manager appointments, and the Charity Commission has decided to change its current practice in light of that public interest in receivers and managers, and no doubt partly in response to the propositions advanced by the noble Lord, Lord Swinfen, and others, during the course of our debate. That is a quite proper process.
	Where the commission completes an inquiry under Section 8 of the 1993 Act, it publishes a report of that inquiry. The commission proposes that in future, its report of an inquiry should include details about the costs of the appointment of a receiver and manager where one is appointed. That will include costs associated with the remuneration of the receiver and manager, disbursements and the cost of consultants. Additionally, the commission is reviewing the style and content of inquiry reports, to make them more informative, transparent and accessible, particularly in relation to the financial impact of the inquiry on the charity. That has been a feature of some of the concerns of the noble Lord, Lord Swinfen, in the past.
	The Government do not believe that others should be able to append their comments to a statement of the commission once it has concluded a Section 8 inquiry. I made that point earlier when we were looking at Amendment No. 35.
	The Charity Commission has also recently agreed to publish, on an annual basis, further details about cases where receivers and managers have been appointed. They will include the number of outstanding cases and, for cases closed in the previous year, the name of the charity; the name of the receiver and manager; the dates of appointment and termination of the receiver and manager; the costs; and whether those costs were met by the charity or by the commission itself. It will also include details of additional costs to the charity related to the appointment of the receiver and manager, which will be considered on a case-by-case basis. For 2005–06, details of receiver and manager cases closed in that year will appear on the commission's website. Details relating to continuing inquiries, of course, will not be published.
	Prescribing in legislation the level of detail proposed by the amendment would be inflexible and unhelpful, particularly given the fact that the commission has undertaken to publish details itself. We think that the approach proposed by the commission provides for disclosure in the public interest of the relevant details relating to an appointment of a receiver and manager, without the need for legislation. It will be accepted practice and is another example of good regulatory practice working its way through the commission's procedures. It is welcome and desirable and says a great deal about the internal modernisation that the Charity Commission is undertaking. For those reasons, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Swinfen: I have listened with interest to what the Minister said, and that has been helpful. What concerns me is that when the management of the Charity Commission changes, new managers may have their own rather different ideas. I will bear in mind what the Minister said, and I shall read it carefully in the Official Report. I reserve my right to come back on the subject at the next stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Swinfen: moved Amendment No. 48:
	After Clause 26, insert the following new clause—
	"RIGHT OF REPLY TO INQUIRY REPORTS
	After section 8(6)(b) of the 1993 Act insert—
	"(c) all persons and organisations referred to in a report which is to be published must be invited on 28 days' notice to sign their agreement with the report or alternatively to submit a dissenting opinion which must be published as an appendix with the report within a 200 word limit, and no agreement or dissenting opinion or lack of them shall be taken into account by the Commission or the court in deciding whether a trustee subject to an order removing him as a trustee shall be reinstated.""

Lord Swinfen: I seem to be going on a bit at the moment, but that is the nature of the grouping. The amendment would require the Charity Commission to publish with its inquiry reports the agreement or otherwise of the affected parties. The Minister touched on that briefly earlier on.
	In my view, the amendment is necessary because the commission's reports are often very one-sided and leave a burning sense of injustice in the people referred to in those reports, with no opportunity to refute unbalanced information. In too many of the commission's cases, the victims have suffered unjust treatment and have then had to suffer further a one-sided account being published on the much-visited Charity Commission website, where it remains, I understand, for two years.
	The Minister said in the previous Parliament, when we were in Grand Committee on the previous Bill, that anyone affected by an inquiry was free to publish his own account of it however he wished. That is in col. GC 441 of Hansard for 14 March 2005. That is not good enough. The reputation of the commission's fairness in its reports is tarnished. That reputation and the quality of the reports will both be improved if the amendment is accepted.
	The noble Baroness, Lady Howe of Idlicote, reminded the Grand Committee considering the earlier Charities Bill of the contrast in approach with the inspection report provisions in the Education Act, where a consensus view was sought where possible. Such an approach does not preclude real disagreement being expressed between the regulator and the regulated, but having dissenting opinions published will help to concentrate the minds of commission staff in addressing real differences of opinion, instead of simply ignoring them.
	The dissenting opinion will be published on the commission's website, not just where the charity chooses, because people who look at the website at the moment cannot see which remarks a charity considers unjust. I beg to move.

Lord Bassam of Brighton: We have had this debate on two or three occasions, and my response will not be terribly different from what it has been in the past.
	I rest on these points. First, as I said last time, it is open to those who are concerned and aggrieved to publish their own account. Secondly, if they are trustees, those persons will have had the opportunity to provide evidence in detail to the commission on the conduct of its inquiry. Thirdly, the commission will usually, as a matter of course, invite comments on the report being prepared, so there is an opportunity to go over any factual matters that might be in dispute.
	In the end, we must accept that the commission has a job to do. It is the regulator. It is there to regulate and pass judgment. Sometimes, people will be aggrieved by those judgments, but that is its purpose. In the end, it is there to protect the public interest and the public good. For the most part, I am sure, the commission gets it right. There will be occasions where its judgments are questioned, but we must have confidence that the commission will operate in the public interest in the way in which its responsibilities are set out.
	Although the noble Lord makes an important point about those affected having the opportunity to make representations, I cannot accept that that difference of view need be reflected in a balanced way by appending the charity's judgment of the circumstances in which it finds itself to the commission's official inquiry report. To do so would, in some ways, put those making such representations in a rather elevated position. The regulator is there to regulate. We should enable it to get on with that job and to express a view when it has conducted a proper inquiry.
	The noble Lord, Lord Swinfen, and I are just not going to agree on this one. I invite him to think with some care about what I have said before he comes back at a later stage. It is one of those issues where we cannot make any further moves in the noble Lord's direction.

Lord Swinfen: The noble Lord, Lord Bassam, and I have often disagreed across the Chamber, and I suspect that that may go on for some time yet. I entirely agree that the commission's job is to regulate; I do not dissent from that by one jot. I am trying to ensure that the matters are handled as fairly as possible. I will read with care what the Minister has said, but I reserve my right to come back at the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 27 [Annual audit or examination of accounts of charities which are not companies]:

Lord Hodgson of Astley Abbotts: moved Amendment No. 49:
	Page 27, leave out lines 28 to 32 and insert—
	"(b) the charity's assets exceed £2.8 million"

Lord Hodgson of Astley Abbotts: This is another amendment that we have tabled to try to make clearer and simpler the thresholds at which the need for inspection or examination of accounts kick in. As I argued in Committee on 14 March, in Hansard at cols. GC 457–58, the Bill provides for a rather complicated double test for a charity to satisfy before it can determine whether it is required by statute to have its accounts audited. That requirement would apply if either,
	"the charity's gross income in that year exceeds £500,000; or . . . the charity's gross income in that year exceeds the accounts threshold"—
	£100,000—
	"and at the end of the year the aggregate value of its assets (before deduction of liabilities) exceeds £2.8 million".
	The two-pronged nature of that second test seems unduly complicated, particularly when read alongside the first. It seems perfectly sensible that a charity with assets of more than £2.8 million should in any event be required to have an audit, even if those assets are primarily functional assets or for some other reason do not produce high levels of income. Losing assets worth £2.8 million could have an impact on public confidence. The fact that the charity had an annual income below £100,000 would not make any difference to that.
	The Minister explained the value of the concept of the accounts threshold at col. GC 458 on 14 March, but I felt that it was an inadequate explanation of a threshold that makes only this one fleeting appearance in the Bill. Is the accounts threshold truly necessary considering that there are two other tests concerning, first, the annual gross income, and secondly, the aggregate value of the assets? Surely, the fact that a charity's assets exceed £2.8 million should be a sufficient benchmark to establish whether a charity needs an audit.
	Members of the Committee might notice that the amendment differs from the one to which I spoke in the earlier Committee, in that it excludes the words "before deduction of liabilities". That follows a point made by the noble Lord, Lord Phillips, who asked in that Committee:
	"Why is the £2.8 million taken before deduction of liabilities? That seems very odd, even bizarre, if you have a land charity with £3 million in assets and a mortgage of £2.5 million".
	The noble Lord, Lord Bassam, replied:
	"Yes, all right. The noble Lord has floored me. Having heard what I have been advised, I want to drop the noble Lord a note about it. I want to understand the point better as well".—[Official Report, 14/3/05; col. GC 459.]
	Our point remains achieving clarity about the thresholds and dividing lines that govern charity law. If you have £2.8 million of assets, there should be a return on it. If you have geared up your assets by borrowing against them, as envisaged by the noble Lord, Lord Phillips, you have assumed implicitly a greater degree of risk. Therefore the need for an audit is not removed—in fact, it is probably increased. Therefore, the second alternative of the test should be simplified by referring simply to the asset value of £2.8 million, and the reference to income levels in this part should be deleted. I beg to move.

Lord Bassam of Brighton: I shall approach the amendment on a slightly different tack this time. As the noble Lord, Lord Hodgson, knows, I am usually the first to give him credit when it is due. I have admired for some time his instinct for deregulation, which is admirable—we are all in favour of deregulation—but he has let us down rather badly with this amendment. It would make things significantly worse, more difficult and expensive for potentially a large number of charities.
	There are many landowning charities, such as those governing recreation grounds, allotments, libraries and so on, that have little or no income but have land interests. Because they are not required to prepare a balance sheet showing the market value of their assets, they are often not in a position to know whether they would exceed the £2.8 million asset threshold. There would have to be some sort of accompanying requirement on them to have their assets valued. However, some of those charities have such small liquid resources that, frankly, they could not afford the cost of a valuation, let alone the cost of the audit that they would then have to undertake if they found that, by chance, their assets were worth more than £2.8 million. It would be highly unsatisfactory if they had to sell some of their assets to pay for the cost of having those assets valued and their accounts audited. What would be the benefit in that? I cannot see it at all.
	We know from Charity Commission figures that there are 123,000 charities with an annual income below £100,000. The proportion of those that have assets worth more than £2.8 million is not precisely known, but the commission's tentative estimate suggests that 10,000 or so charities could be caught by the requirement and would have to pay possibly for a valuation and certainly for a professional audit. I do not know how much such things cost; the noble Lord, Lord Hodgson, knows a great deal more about them than I do, but it seems out of all proportion to the risk involved in leaving them in the unaudited category. Those with income between £10,000 and £100,000 are in any case subject to a requirement for an annual independent examination.
	If the noble Lord, Lord Hodgson, wanted to salvage his deregulatory credentials, I would invite him to withdraw the amendment.

Lord Hodgson of Astley Abbotts: I have enjoyed being on the end of the Minister's toasting fork. He has held my feet firmly to the fire. He makes a perfectly fair point, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 27 agreed to.
	Clause 28 agreed to.

Lord Bassam of Brighton: moved Amendment No. 50:
	After Clause 28, insert the following new clause—
	"GROUP ACCOUNTS
	(1) After section 49 of the 1993 Act insert—
	"49A GROUP ACCOUNTS
	The provisions of Schedule 5ZA to this Act shall have effect with respect to—
	(a) the preparation and auditing of accounts in respect of groups consisting of parent charities and their subsidiary undertakings (within the meaning of that Schedule), and
	(b) other matters relating to such groups."
	(2) Schedule (Group accounts) (which inserts the new Schedule 5ZA into the 1993 Act) has effect."

Lord Bassam of Brighton: This is a large group of government amendments. I shall not detain the Committee too long in explaining them, but some words need to be put on record so that the amendments can be made more comprehensible. I shall try.
	In Grand Committee before the election, my noble friend Lord Dubs moved amendments on group accounting by charities. The purpose of those amendments was to introduce a requirement on a charity with subsidiaries under its control—we shall call it the "parent" charity—to prepare annual accounts relating to the whole group consisting of the parent and all its subsidiaries. The present requirement is that the parent and each of its subsidiaries should prepare accounts relating to itself alone. That does not give the reader of any individual accounts in any sense an adequate picture of the interconnected web of financial affairs of the group as a whole and, in some cases, can effectively allow the concealment of substantial flows of income and expenditure. I understand from the Charity Commission that, in practice, about 95 per cent of parent charities already prepare group accounts in the interests of transparency, so the new provisions will simply require them to carry on doing what they are already doing and will not impose any novel regulatory burden.
	I responded sympathetically at the time to my noble friend Lord Dubs and agreed to consider his amendments with a view to tabling government amendments on Report. In the event and given the relatively complex drafting, there was insufficient time to prepare those amendments between Committee and Report. Members of the Committee will notice that the amendments are rather lengthy; we have taken the opportunity of the period since the Bill was reintroduced to prepare them.
	I shall list the main provisions of the amendments. The first is to impose a general requirement to prepare group accounts on a charity which is a parent charity. The second is to allow my right honourable friend the Home Secretary by regulation to make exceptions to that requirement. That power could, for example, be exercised to relieve very small groups from the group accounting requirements in the interests of avoiding excessive burdens. Thirdly, the amendments allow regulations to prescribe the form and content of group accounts. Fourthly, they require a professional audit of the accounts of larger groups and a lesser examination of the accounts of other groups, using the same audit thresholds as apply to individual charities under the Bill. Fifthly and finally, they require the annual reports of parent charities to cover the group's activities as a whole.
	Members of the Committee will no doubt want to study the new provisions closely at greater leisure, and I do not intend to detain the Committee with a detailed exposition of each one. Within the general framework that we propose, we remain open to sensible suggestions for refinements at the Bill's next stage. People should not take that as too big an invitation but, if something does not seem to suit or work, we want to know about it.
	The Committee will notice that Amendment No. 58 has been grouped with the amendments but does not really belong with them. I shall move it in its proper place. I beg to move.

Lord Hodgson of Astley Abbotts: I thank the Minister for that comprehensive explanation of the matter that we debated at some length in Grand Committee in the previous Parliament. I shall not pretend that I traced the amendments from end to end, but has the Minister or his Bill team seen the letter from the Association of Charity Independent Examiners? It contains a number of detailed and technical points, to which, for the record, I shall refer briefly. I am sure that it would be then be helpful, given the Minister's kind invitation to consider refinements, if we could look at them in detail to ensure that we are, as he said, being properly deregulatory.
	The concerns include the need for clarity about what is meant by "subsidiaries" and whether the proposals result in what is intended. The present position appears to be that parent charities who are incorporated, irrespective of the nature of their subsidiaries, must submit to consolidated accounts under company law. Subsidiaries that are themselves charities already have to account for their funds within the reporting of the parent charity, under the Charity Commission direction under Section 96(5) of the Charities Act 1993.
	If that is correct, this proposal applies only to unincorporated parent charities with non-charitable subsidiaries—for example, charities with subsidiary trading companies. Given that this specific applicability results in the need to bring together charity and company law, the result is a sizeable increase in the volume and complexity of the accounting provisions of the current Charities Bill.
	The second point concerns the definition of "gross income" and removing a number of charities out of the remit of independent examination and into the threshold of full audit. That is the reverse of the issue that the Minister chided me for a few minutes ago. By defining a charity's gross income as that of the,
	"aggregate gross income of the group",
	in proposed new Schedule 5ZA paragraph 6(3)(b), it is easy to see that a number of charities which are currently eligible for independent examination, on the basis of an income comprising their own income plus the profit from their trading subsidiaries, would need move to a full audit if they had to include the income of their trading subsidiary, not just its profits.
	The third and final point is the increased complication of independent examination which is, after all, meant to be a proportionate external scrutiny for smaller charities. As well as the charities which have to move to full audit, those whose aggregate gross income would remain small enough to allow them to opt for independent examination, rather than audit, would have a raft of new legislation to understand and comply with. Paragraph 6 of proposed new Schedule 5ZA, which deals with independent examination, would more than double the statutory requirements on independent examination.
	In particular, the independent examination report would then have to be about the group, not just the single charity. That would entail both the examination of the subsidiary's accounts in some detail and an understanding of the principles of group accounts and consolidation, neither of which are requisite at the moment. This has both training implications for independent examiners and cost consequences for the charities affected.
	The Minister has proposed a complicated group of amendments and I have thrown back a complicated series of questions to him. I do not ask him to reply to these this evening, but it would be helpful if he could see whether this matter could be bottomed out before we reach the next stage of the Bill.

Lord Bassam of Brighton: I am grateful to the noble Lord for addressing the House in such a manner. I am not in a position to answer his detailed points and the noble Lord has been fair in that. The noble Lord, Lord Phillips, wishes to be helpful.

Lord Phillips of Sudbury: I apologise if the Minister is now responding to the debate on this group of amendments. I planned to say a word or two only to express unhappiness with the group of amendments. Two wrongs do not make a right in that regard. I am aware of the fact that when there is a set of corporate charities—parent and subsidiaries—they already amalgamate their accounts under the relevant legislation. Whatever the merits of that, there are more de-merits. In particular, mixing charities and non-charities is like mixing oil and water. They are subject to different legal regimes and, rather than casting light on their affairs, they are more likely to mislead. The present arrangement, whereby a charitable trust has a set of companies of which it is the owner, is adequately dealt with by means of notes and transparency in the account of the parent non-corporate charity. Not everyone thinks that this is a bright idea and I wished to put that on the record.

Lord Bassam of Brighton: I thank the noble Lord and I am sorry that I was not quick enough to see him rising before beginning to speak. As I was trying to explain, we have not yet the seen letter from the Association of Independent Charity Examiners. No doubt, it makes good points and the noble Lord, Lord Hodgson, has voiced some of them. I heard what the noble Lord, Lord Phillips, said and it is worth repeating that we are including accepted good practice in advance of the legislation. Some 95 per cent of those charities in that position already conform with this practice and we are trying to ensure wider coverage, for good reasons.
	I shall move the amendments, but, as I said during my opening comments, we are open to representations regarding fine tuning. Given the comments of the noble Lord, Lord Hodgson, the independent examiners' letter may well enable us to focus on any particular problems and so I am grateful to him for that.

On Question, amendment agreed to.
	Clause 29 agreed to.
	Clause 30 [Annual audit or examination of accounts of charitable companies]:
	[Amendment No. 51 not moved.]
	Clause 30 agreed to.
	Clauses 31 and 32 agreed to.

Lord Best: moved Amendment No. 51A:
	After Clause 32, insert the following new clause—
	"TRUSTEES UNDER 18 YEARS
	In section 20 of the Law of Property Act 1925 (c. 20) (infants not to be appointed trustees) insert the following new subsection—
	"(2) For the purposes of subsection (1), the definition of "trust" shall not include unincorporated charities.""

Lord Best: The amendment would enable a young person under 18 years of age to participate in the work of a charity as a trustee. I am grateful for an extensive briefing on this issue from Bess Herbert and Louise King of the Children's Rights Alliance for England, a body supported by Barnardo's, the British Youth Council and others.
	The amendment would mean that, for example, 16 and 17 year-olds could be involved in the management of charities which provide services to them, including education, or which seek to represent the views and interest of young people.
	The current position is that under-18s can be trustees of incorporated charities—charities registered as companies. Thus a new charity, the Welsh Youth Parliament, known as "Funky Dragon", was registered in May of last year, with four of its eight trustees aged under 18. But, due to provisions in the Law of Property Act 1925, which debars the appointment of an "infant" to be a trustee and defines an infant as someone under 18, no trustee of an unincorporated charity can be under 18. That now seems out of date.
	The participation of young people is part of the UN Convention on the Rights of the Child. Article 12 states that all children have the right to express their views, have them taken into account and be given due weight in all matters that affect them. That principle is accepted across the public, voluntary and private sectors. For example, regulations passed by Parliament in 2003 allow children and young people to be part of committees of school governing bodies, with no minimum age.
	The National Health Service Reform and Health Care Professions Act 2002 requires every hospital in the country to set up a patients' forum that includes children and young people. The Department for Education and Skills published guidelines in 2004 in Working Together: Giving children and young people a say, which gives lots of advice on how children and young people can be more involved in the running of their schools, and so on.
	It seems that Clause 32 of the Bill, which creates the new legal status for charities of "charitable incorporated organisations" and which does not specify an age limit would allow this new kind of charity to have trustees under 18 years old. I would be grateful for confirmation of that from the Minister. If it is the case, it makes the position of the unincorporated charity even more of an anomaly. Incorporated charities and charitable incorporated organisations can have younger trustees, but the more usual unincorporated charities cannot.
	There are a number of unincorporated charities that would like to involve those who are under 18 as trustees. The British Youth Council is a prime example. Presently all its trustees are between 18 and 25, but it is prevented from drawing in anyone under 18. Such charities could seek to become incorporated, which would remove the obstacle of infants being ineligible to become trustees. But incorporation is likely to require extensive change to the charity's constitution and can be a very costly process. My own charity, the Joseph Rowntree Foundation, considered incorporation and rejected the idea on those grounds.
	This is a probing amendment that seeks to see whether there is an opportunity for change to help compliance with the UN Convention on the Rights of the Child and to enable good practice in encouraging the participation of young people in the affairs of charities. I would be most grateful for the Minister's views. I beg to move.

Lord Swinfen: I see what the noble Lord, Lord Best, is trying to do, but I have the feeling that his amendment needs further consideration. The noble Lord talked about young people of 16 to 18 becoming trustees but, as I read his amendment, it could also allow young people of six to eight to become trustees because there are no age limits in the amendment. Children of six to eight years old certainly would not have the experience to deal with such matters and could be directed by someone else, rather than acting themselves, as a trustee has to do, for the benefit of the charity.

Lord Phillips of Sudbury: I rise to comment on this very interesting amendment, which might even be described as a funky amendment, moved by the noble Lord, Lord Best. I am sympathetic in principle to what he is driving at, but, since it is a probing amendment, I wonder whether he has considered limiting the number of trustees under the age of 18 in order to prevent the rare but possible event of someone setting up a charity governed entirely by 16 year-olds.
	I also wonder whether the noble Lord, Lord Best, has been briefed about the impact of the general law of contract on charities and minors, given that trustees of an unincorporated charity will be entering into contracts in their own name and there could be complications. I raise these points in a spirit of support, rather than as mere criticism.

Lord Bassam of Brighton: This is a very interesting amendment and I congratulate the noble Lord, Lord Best, on tabling it. I think there is something in it and I shall say more about that towards the conclusion of my comments.
	The noble Lord, Lord Best, has explained the law preventing a person from being a trustee if he or she is under the age of majority, which at present is 18. This is achieved by specifying that the appointment of such a person is void. The rule applies to all trusts, private and charitable. It means that no attempt to appoint a person under 18 as a trustee of a charitable trust or a charitable unincorporated association has any legal validity. Any general change to this rule would have to be very carefully justified as being in the best interests of the beneficiaries of any trust. It is also difficult to see how the proposal could be effected, given the legal rules on the capacity of minors to make contracts, on which the noble Lord, Lord Phillips, made the killer point.
	The rule for directors of companies is different. That rule is relevant because about 15 per cent of all charities are set up in company form, rising to about 50 per cent among the largest charities. Under company law, there is at present no minimum age for a director. That allows charitable companies to appoint people under 18 as directors.
	However, I should draw your Lordships' attention to the Company Law Reform White Paper published for consultation by my right honourable friend the Secretary of State for Trade and Industry in March of this year. The White Paper points out that it is for every company to ensure that it appoints as directors people who are not only capable of understanding their duties as company directors but who can also take full responsibility for their actions and omissions. The White Paper accordingly proposes that a statutory minimum age of 16 be introduced for company directors, which of course would include the directors of charitable companies. Subject to consideration of the responses to public consultation on the White Paper, which closed recently, provisions to establish 16 as the minimum age for directors will be included in the company law reform Bill that was mentioned in the Queen's Speech in May.
	The duties of directors are different from the duties of trustees, and I should also point out that there is already a statutory minimum age of 18 for charity trustees of charities set up as industrial and provident societies or as friendly societies. This amendment would not affect such charities.
	Although the amendment of the noble Lord, Lord Best, would enable, say, 16 or 17 year-olds to become trustees, which might be appropriate in some circumstances, it would do away with any minimum age for a trustee of a charitable trust. While any general age limit is to some extent arbitrary, as understanding does not necessarily advance equally with years, the amendment would allow the appointment of a person who was too young to understand the duties of the office or to take responsibility for the consequences of his actions. That is what the proposed change to company law aims to prevent.
	As the noble Lord, Lord Phillips, said, there are also some legal issues to think about. One of them is that a minor cannot be the owner of any legal interest in land, with or without other people. Because a charitable trust has no legal personality, the trustees must be the legal owners of the charity's land but they could not be if they were under 18.
	A second issue is that if a person under 18 is party to a contract, the contract generally cannot be enforced against that person. I think that any company or person with whom a charity wanted to do business would be very reluctant to enter into a contract with its trustees if they could not be compelled to meet their contractual obligations because they were under 18.
	A third issue is that there is no obvious legal reason why the age limit for a charitable trustee should be any different from that for a general trustee. A fourth issue is that the parents of a trustee under 18 could sometimes be liable for a breach of trust committed by that trustee. That would normally arise where the parent was directly implicated in the breach of trust, for example, because the parent had advised or encouraged the trustee to do, or not to do, the thing that constituted a breach of trust.
	For these reasons, the Government cannot accept the amendment in its present form. We agree, however, that it is desirable that children and young people should be able to influence the governance, policies and services of charities set up to cater for their needs. Many charities already achieve that by means other than having children and young people on their trustee boards, but it is worth noting that in October last year the Charity Commission for the first time registered a charity with people under 18 on its board. The noble Lord, Lord Best, has already made reference to the Welsh youth parliament, Funky Dragon, which is set up as a charitable company. Under its constitution, up to 50 per cent of its board members are allowed to be under 18, though, if the Government's company law reform proposal that I mentioned earlier is enacted, those board members will have to be at least 16 years old.
	I suggest that there is something of real value in what the noble Lord, Lord Best, has proposed in his amendment. Over the Summer Recess we would like to give more consideration to the issues the amendment raises. I cannot give a hard and fast commitment that I will bring forward a government amendment on Report, but I do make a commitment to take serious account of the issues raised. Taking this period will enable us to take into account the results of the recently closed company law reform consultation, bearing in mind also that, because trustees of charitable trusts act personally rather than as agents of a corporation, the legal issues are potentially more complex and wide-ranging for trusts than for companies. We will also have to think about the position of trustees of the new CIO form created by the Bill. So there is an added complexity.
	I hope that my response does not sound unduly negative. It is not intended to be; it is intended to say, "Okay, there is a good idea here. We can see that. The Charity Commission has in a sense already acknowledged it through its registration of Funky Dragon. This is a cool concept. We will take it away and give it fair consideration and have more discussion with the noble Lord and others to see what we can achieve as a product of this".

Lord Best: I am extremely grateful to the Minister for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton: moved Amendment No. 52:
	Before Schedule 6, insert the following new schedule—
	"SCHEDULE GROUP ACCOUNTS
	After Schedule 5 to the 1993 Act insert—
	"SCHEDULE 5ZA GROUP ACCOUNTS
	:TITLE3:Interpretation
	1 (1) This paragraph applies for the purposes of this Schedule.
	(2) A charity is a "parent charity" if—
	(a) it is (or is to be treated as) a parent undertaking in relation to one or more other undertakings in accordance with the provisions of section 258 of, and Schedule 10A to, the Companies Act 1985, and
	(b) it is not a company.
	(3) Each undertaking in relation to which a parent charity is (or is to be treated as) a parent undertaking in accordance with those provisions is a "subsidiary undertaking" in relation to the parent charity.
	(4) But sub-paragraph (3) does not have the result that any of the following is a "subsidiary undertaking"—
	(a) any special trusts of a charity,
	(b) any institution to which a direction under section 96(5) of this Act applies for the purposes of this Part of this Act, or
	(c) any charity to which a direction under section 96(6) of this Act applies for those purposes.
	(5) "The group", in relation to a parent charity, means that charity and its subsidiary undertaking or undertakings, and any reference to the members of the group is to be construed accordingly.
	(6) For the purposes of—
	(a) this paragraph, and
	(b) the operation of the provisions mentioned in sub-paragraph (2) above for the purposes of this paragraph,
	"undertaking" has the meaning given by sub-paragraph (7) below.
	(7) For those purposes "undertaking" means—
	(a) an undertaking as defined by section 259(1) of the Companies Act 1985, or
	(b) a charity which is not an undertaking as so defined.

Preparation of group accounts

2 (1) This paragraph applies in relation to a financial year of a charity if it is a parent charity at the end of that year.
	(2) The charity trustees of the parent charity must prepare group accounts in respect of that year.
	(3) "Group accounts" means consolidated accounts—
	(a) relating to the group, and
	(b) complying with such requirements as to their form and contents as may be prescribed by regulations made by the Secretary of State.
	(4) Without prejudice to the generality of sub-paragraph (3), regulations under that sub-paragraph may make provision—
	(a) for any such accounts to be prepared in accordance with such methods and principles as are specified or referred to in the regulations;
	(b) for dealing with cases where the financial years of the members of the group do not all coincide;
	(c) as to any information to be provided by way of notes to the accounts.
	(5) Regulations under that sub-paragraph may also make provision—
	(a) for determining the financial years of subsidiary undertakings for the purposes of this Schedule;
	(b) for imposing on the charity trustees of a parent charity requirements with respect to securing that such financial years coincide with that of the charity.
	(6) If the requirement in sub-paragraph (2) applies to the charity trustees of a parent charity in relation to a financial year—
	(a) that requirement so applies in addition to the requirement in section 42(1) of this Act, and
	(b) the option of preparing the documents mentioned in section 42(3) of this Act is not available in relation to that year (whatever the amount of the charity's gross income for that year).
	(7) Sub-paragraph (2) has effect subject to paragraph 3.

Exceptions relating to requirement to prepare group accounts

3 (1) The requirement in paragraph 2(2) does not apply to the charity trustees of a parent charity in relation to a financial year if at the end of that year it is itself a subsidiary undertaking in relation to another charity.
	(2) The requirement in paragraph 2(2) does not apply to the charity trustees of a parent charity in relation to a financial year if the aggregate gross income of the group for that year does not exceed such sum as is specified in regulations made by the Secretary of State.
	(3) Regulations made by the Secretary of State may prescribe circumstances in which a subsidiary undertaking may or (as the case may be) must be excluded from group accounts required to be prepared under paragraph 2(2) for a financial year.
	(4) Where, by virtue of such regulations, each of the subsidiary undertakings which are members of a group is either permitted or required to be excluded from any such group accounts for a financial year, the requirement in paragraph 2(2) does not apply to the charity trustees of the parent charity in relation to that year.

Preservation of group accounts

4 (1) The charity trustees of a charity shall preserve any group accounts prepared by them under paragraph 2(2) for at least six years from the end of the financial year to which the accounts relate.
	(2) Subsection (4) of section 41 of this Act shall apply in relation to the preservation of any such accounts as it applies in relation to the preservation of any accounting records (the references to subsection (3) of that section being construed as references to sub-paragraph (1) above).

Audit of accounts of larger groups

5 (1) This paragraph applies where group accounts are prepared for a financial year of a parent charity under paragraph 2(2) and—
	(a) the aggregate gross income of the group in that year exceeds £500,000 (or such other sum as is for the time being specified in section 43(1)(a) of this Act), or
	(b) the aggregate gross income of the group in that year exceeds the accounts threshold and at the end of the year the aggregate value of the assets of the group (before deduction of liabilities) exceeds £2.8 million (or such other sum as is for the time being specified in section 43(1)(b) of this Act).
	"The accounts threshold" means £100,000 (or such other sum as is for the time being specified in section 42(3) of this Act).
	(2) If this paragraph applies in relation to a financial year of a parent charity, the group accounts for that year shall be audited—
	(a) (subject to paragraph (b) or (c) below) by a person within section 43(2)(a) or (b) of this Act;
	(b) if section 43A of this Act applies in relation to that year, by a person appointed by the Audit Commission (see section 43A(7));
	(c) if section 43B of this Act applies in relation to that year, by the Auditor General for Wales.
	(3) Where it appears to the Commission that sub-paragraph (2)(a) above has not been complied with in relation to that year within ten months from the end of that year—
	(a) the Commission may by order require the group accounts for that year to be audited by a person within section 43(2)(a) or (b) of this Act, and
	(b) if it so orders, the auditor shall be a person appointed by the Commission.
	(4) Section 43(6) of this Act shall apply in relation to any such audit as it applies in relation to an audit carried out by an auditor appointed under section 43(5) (reading the reference to the funds of the charity as a reference to the funds of the parent charity).
	(5) Section 43A(4) and (6) of this Act apply in relation to any appointment under sub-paragraph (2)(b) above as they apply in relation to an appointment under section 43A(2).
	(6) If this paragraph applies in relation to a financial year of a parent charity, the appropriate audit provision shall apply in relation to the parent charity's own accounts for that year (whether or not it would otherwise so apply).
	(7) "The appropriate audit provision", in relation to a financial year of a parent company, means—
	(a) (subject to paragraph (b) or (c) below) section 43(2) of this Act;
	(b) if section 43A of this Act applies in relation to that year, section 43A(2);
	(c) if section 43B of this Act applies in relation to that year, section 43B(2).

Examination of accounts of smaller groups

6 (1) This paragraph applies where—
	(a) group accounts are prepared for a financial year of a parent charity under paragraph 2(2), and
	(b) paragraph 5 does not apply in relation to that year.
	(2) If—
	(a) this paragraph applies in relation to a financial year of a parent charity, and
	(b) sub-paragraph (4) or (5) below does not apply in relation to it,
	subsections (3) to (7) of section 43 of this Act shall apply in relation to the group accounts for that year as they apply in relation to the accounts of a charity for a financial year in relation to which subsection (2) of that section does not apply, but subject to the modifications in sub-paragraph (3) below.
	(3) The modifications are—
	(a) any reference to the charity trustees of the charity is to be construed as a reference to the charity trustees of the parent charity;
	(b) any reference to the charity's gross income in the financial year in question is to be construed as a reference to the aggregate gross income of the group in that year; and
	(c) any reference to the funds of the charity is to be construed as a reference to the funds of the parent charity.
	(4) If—
	(a) this paragraph applies in relation to a financial year of a parent charity, and
	(b) section 43A of this Act also applies in relation to that year,
	subsections (3) to (6) of that section shall apply in relation to the group accounts for that year as they apply in relation to the accounts of a charity for a financial year in relation to which subsection (2) of that section does not apply.
	(5) If—
	(a) this paragraph applies in relation to a financial year of a parent charity, and
	(b) section 43B of this Act also applies in relation to that year,
	subsection (3) of that section shall apply in relation to the group accounts for that year as they apply in relation to the accounts of a charity for a financial year in relation to which subsection (2) of that section does not apply.
	(6) If the group accounts for a financial year of a parent charity are to be examined or audited in accordance with section 43(3) of this Act (as applied by sub-paragraph (2) above), section 43(3) shall apply in relation to the parent charity's own accounts for that year (whether or not it would otherwise so apply).
	(7) Nothing in sub-paragraph (4) or (5) above affects the operation of section 43A(3) to (6) or (as the case may be) section 43B(3) in relation to the parent charity's own accounts for the financial year in question.

Supplementary provisions relating to audits etc.

7 (1) Section 44(1) of this Act shall apply in relation to audits and examinations carried out under or by virtue of paragraph 5 or 6, but subject to the modifications in sub-paragraph (2) below.
	(2) The modifications are—
	(a) in paragraph (b), the reference to section 43, 43A or 43B of this Act is to be construed as a reference to paragraph 5 above or to any of those sections as applied by paragraph 6 above;
	(b) also in paragraph (b), the reference to any such statement of accounts as is mentioned in sub-paragraph (i) of that paragraph is to be construed as a reference to group accounts prepared for a financial year under paragraph 2(2) above;
	(c) in paragraph (c), any reference to section 43, 43A or 43B of this Act is to be construed as a reference to that section as applied by paragraph 6 above;
	(d) in paragraphs (d) and (e), any reference to the charity concerned or a charity is to be construed as a reference to any member of the group; and
	(e) in paragraph (f), the reference to the requirements of section 43(2) or (3) of this Act is to be construed as a reference to the requirements of paragraph 5(2)(a) or those applied by paragraph 6(2) above.
	(3) Without prejudice to the generality of section 44(1)(e), as modified by sub-paragraph (2)(d) above, regulations made under that provision may make provision corresponding or similar to any provision made by section 389A of the Companies Act 1985 (c. 6) in connection with the rights exercisable by an auditor of a company in relation to a subsidiary undertaking of the company.
	(4) In section 44(2) of this Act the reference to section 44(1)(d) or (e) includes a reference to that provision as it applies in accordance with this paragraph.
	(5) In section 44(3) of this Act the reference to a person appointed in pursuance of section 43 includes a reference to a person appointed under or by virtue of paragraph 5(2)(a) or 6(2) above.

Duty of auditors etc. to report matters to Commission

8 (1) Section 44A(2) to (5) and (7) of this Act shall apply in relation to a person appointed to audit, or report on, any group accounts under or by virtue of paragraph 5 or 6 above as they apply in relation to a person such as is mentioned in section 44A(1).
	(2) In section 44A(2)(a), as it applies in accordance with sub-paragraph (1) above, the reference to the charity or any connected institution or body is to be construed as a reference to the parent charity or any of its subsidiary undertakings.

Annual reports

9 (1) This paragraph applies where group accounts are prepared for a financial year of a parent charity under paragraph 2(2).
	(2) The annual report prepared by the charity trustees of the parent charity in respect of that year under section 45 of this Act shall include—
	(a) such a report by the trustees on the activities of the charity's subsidiary undertakings during that year, and
	(b) such other information relating to any of those undertakings,
	as may be prescribed by regulations made by the Secretary of State.
	(3) Without prejudice to the generality of sub-paragraph (2), regulations under that sub-paragraph may make provision—
	(a) for any such report as is mentioned in paragraph (a) of that sub-paragraph to be prepared in accordance with such principles as are specified or referred to in the regulations;
	(b) enabling the Commission to dispense with any requirement prescribed by virtue of sub-paragraph (2)(b) in the case of a particular subsidiary undertaking or a particular class of subsidiary undertaking.
	(4) Section 45(3) to (3B) shall apply in relation to the annual report referred to in sub-paragraph (2) above as if any reference to the charity's gross income in the financial year in question were a reference to the aggregate gross income of the group in that year.
	(5) When transmitted to the Commission in accordance with sub-paragraph (4) above, the annual report shall have attached to it both the group accounts prepared for that year under paragraph 2(2) and—
	(a) a copy of the report made by the auditor on those accounts; or
	(b) where those accounts have been examined under section 43, 43A or 43B of this Act (as applied by paragraph 6 above), a copy of the report made by the person carrying out the examination.
	(6) The requirements in this paragraph are in addition to those in section 45 of this Act.

Excepted charities

10 (1) This paragraph applies where—
	(a) a charity is required to prepare an annual report in respect of a financial year by virtue of section 46(5) of this Act,
	(b) the charity is a parent charity at the end of the year, and
	(c) group accounts are prepared for that year under paragraph 2(2) by the charity trustees of the charity.
	(2) When transmitted to the Commission in accordance with section 46(7) of this Act, the annual report shall have attached to it both the group accounts and—
	(a) a copy of the report made by the auditor on those accounts; or
	(b) where those accounts have been examined under section 43, 43A or 43B of this Act (as applied by paragraph 6 above), a copy of the report made by the person carrying out the examination.
	(3) The requirement in sub-paragraph (2) is in addition to that in section 46(6) of this Act.

Exempt charities

11 Nothing in the preceding provisions of this Schedule applies to an exempt charity.

Public inspection of annual reports etc.

12 In section 47(2) of this Act, the reference to a charity's most recent accounts includes, in relation to a charity whose charity trustees have prepared any group accounts under paragraph 2(2), the group accounts most recently prepared by them.

Offences

13 (1) Section 49(1) of this Act applies in relation to a requirement within sub-paragraph (2) as it applies in relation to a requirement within section 49(1)(a).
	(2) A requirement is within this sub-paragraph where it is imposed by section 45(3) or (3A) of this Act, taken with—
	(a) section 45(3B), (4) and (5), and
	(b) paragraph 9(5) or 10(2) above,
	as applicable.
	(3) In sub-paragraph (2) any reference to section 45(3), (3A) or (3B) of this Act is a reference to that provision as applied by paragraph 9(4) above.
	(4) In section 49(1)(b) the reference to section 47(2) of this Act includes a reference to that provision as extended by paragraph 12 above.

Aggregate gross income

14 The Secretary of State may by regulations make provision for determining for the purposes of this Schedule the amount of the aggregate gross income for a financial year of a group consisting of a parent charity and its subsidiary undertaking or undertakings.""
	On Question, amendment agreed to.
	Schedule 6 [Charitable incorporated organisations]:

Lord Phillips of Sudbury: moved Amendment No. 53:
	Page 98, line 4, leave out "shall" and insert "may"

Lord Phillips of Sudbury: Amendment No. 53 is grouped with Amendment No. 54, which is also in my name. This goes back to a debate we had in Committee before the election. The amendment emanates from the Charity Law Association. I received a letter from it which contains a very succinct explanation of why these two amendments are needed. It states:
	"We would also be grateful if you would press to have the CIO provisions amended so that the vehicle is available in a non-member form, with a single tier of governance. As you are aware, it was the intention of those who first proposed the CIO that it should be available in both member and non-member forms. If I recall rightly, the reasons for rejecting a similar amendment last time the Bill was in Committee, were all to do with the fact that companies have members. Surely, if we are creating a new form, this is irrelevant".
	I believe that that is so.
	It is also fair to say that at the back of the Government's scepticism about these two amendments was the fact that they would reverberate through the Companies Act and through the provisions relating to the CIOs. There is no doubt about that, but I press them none the less. It is also true, as the quote I gave from the Charity Law Association makes clear, that my colleagues Stephen Lloyd and Roger Warren Evans, who were the two authors of the CIO as a concept, were extremely keen that the CIO should not have to have a membership.
	One should consider that the majority of CIOs by conversion will go from trusts into the CIO format because it is a light-form corporate vehicle, which some trusts will find much more attractive than going the route of a company limited by guarantee. Of course that is the very point of the CIO—it is a light format with a less bureaucratic overburden. Trusts that convert into the CIOs are themselves single-cell organisms and will want to remain single-cell organisms.
	I think that the point I made last time is valid. Why put a trust converting into a CIO to the trouble and expense of creating the coterminosity between membership and membership of the governing body which is available by fiddling with the articles and memorandum? It is do-able, but it is a complete waste of time, money and energy, and it ends up being much more complicated. I do not see any valid reason why this should not be incorporated. I tabled two sample amendments because I readily accept that there will be a whole series of subsequent or consequent amendments, but we have until 10 October to work those out. I hope very much that the Minister will this time think better of his former ways. I beg to move.

Lord Bassam of Brighton: I have listened to what the noble Lord, Lord Phillips, has said. I shall start by congratulating him and saying that this is an imaginative twist to the legislation. However, I worry that the CIO provision, which I think is a good one, could advance with unnecessary added complexity if it took off in this particular form.
	The charitable incorporated organisation provisions have essentially been drafted on the understanding that, under the law, any incorporated body including a CIO must legally be composed of one or more members. That is the basis on which it has been constructed. I am not a charity lawyer, but that seems to me to be an initially sound foundation.
	The Bill specifically confers on the members of a CIO functions relating to constitutional amendment and corporate reconstruction. The constitutions of many CIOs will confer further functions on the members, such as the appointment of the charity trustees.
	All that is very much in line with other models of corporate organisation. But concerns have been expressed in the case of CIOs whose charity trustees will be the same people as its members that it is unnecessarily burdensome to make them discharge certain functions in the capacity of members and certain functions in the capacity of charity trustees. It is worth noting that the Bill specifically recognises the possibility of CIO members and trustees being the same people. I can see the effect of the amendment, which seeks to allow all functions associated with the operation of a member-less CIO to be discharged by the charity trustees in that capacity.
	It is fair to say that careful consideration was given prior to the introduction of the Bill to ways in which these concerns might be addressed without departing from basic legal concepts relating to incorporation. We think that the burden in cases where the same people are to discharge separate functions wearing separate hats has been overstated. The concerns that have been expressed can be satisfactory addressed by the Charity Commission through the publication of model governing documents for CIOs under the powers that the Bill provides and through the issue of relevant and appropriate guidance.
	In our view this approach is preferable to the complication of the Bill by the addition of provisions designed specifically to apply only when the members of the CIO are the same people as the charity trustees.
	I hope that I have made clear our position on this. I see what the noble Lords says, but, as he has acknowledged, we would have substantially to rewrite large parts of the Bill to achieve the result he is after. It would make it unduly complicated. It is fine to say that there is time on this, but it is the complexity as much as anything else that does not achieve the outcome that the noble Lord seeks. For those reasons, we must stand firm and reject the amendment.

Lord Phillips of Sudbury: I am grateful for that response. We have an equal and opposite complexity at work here. The Minister rightly says that the Bill would be more complicated if we allowed this option, but my point is that it would make life much simpler on the ground. If it is a question of complexity on the ground or complexity in the Bill, I think we go for complexity in the Bill every time. That will mean that on the ground we will have trusts that can convert into CIOs and retain their single-tier structure.
	Although the Minister says that it is not difficult to explain to people that you have members of the governing body but they are the same, and so on, my experience is that the capacity of charities to be bored by their constitutions and ignore them is unbelievable. I could tell tales that would curdle your milk of national charities that do not have a governing body, for example, because no one has remembered that they have a rotation arrangement, and so on. I will shut up now and hope by talking to the Minister in the Corridor before we come back that I will convert him yet. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 54 not moved.]

Lord Hodgson of Astley Abbotts: moved Amendment No. 55:
	Page 100, line 38, after "applicants" insert "subject to its liabilities"

Lord Hodgson of Astley Abbotts: The amendment concerns Schedule 6, which inserts a new Part 8A to the 1993 Act which details the nature and constitution of charitable incorporated organisations. Subsection (3) of Clause 59F provides for the vesting of assets but not the associated liabilities of the CIO. The Charity Law Association has recommended the amendment, which provides for the transfer of responsibility for liabilities on the registration of a CIO. That is necessary for clarity and to ensure that applicants are appropriately protected on vesting.
	Similarly, assets should be passed on with any conditions attaching to them—including, for example, any permanent endowment conditions. If this were a commercial arrangement, such liabilities would be likely to be covered by the provision of an indemnity by the vendors. If such a statutory indemnity were provided, the promoters would still be responsible for the liabilities they originally incurred if, in the event, it proved that the CIO could not meet them. Our argument is that that is likely to inhibit the development of CIOs and that our amendment offers proper protection to all parties. I beg to move.

Lord Phillips of Sudbury: I strongly support the amendments.

Lord Bassam of Brighton: The purpose of new Section 69F, as inserted by paragraph 1 of Schedule 6, is to set out the legal consequences of the registration of a new CIO.
	The CIO will not exist until it is registered, but it is possible that the prospective charity trustees of the new CIO have already started to collect funds before it actually comes into existence. Subsection (3) is intended to facilitate the transfer to the CIO of any property which the people setting it up may be holding, pending registration by the commission.
	The amendment aims to ensure that the CIO is liable on any pre-incorporation contract into which the prospective trustees may have purportedly entered into on its behalf. I say "purportedly" because I understand that it is not legally possible to enter into a contract on behalf of a person or body that does not exist at the time the contract is entered into—I am sure that that makes sense.
	The Government consider that that would go too far. Under company law, liability under a pre-incorporation contract rests with the people who entered into the contract, as per Section 36C of the Companies Act 1985. There is no automatic transfer of liability to the company after it has been formed. The pre-incorporation contractor can, by negotiation with the other party to the contract, or with the company after it is formed, or both, ensure that he is protected from personal liability under the contract if the intention is that the company should be the contracting party after it has come into existence.
	The noble Lord will be able to see from the illustrative CIO regulations, which, as ever, can be found on the Home Office website, that a similar regime is contemplated for the CIO. As is the case with companies, we do not consider it appropriate that the burden of pre-incorporation contracts should be automatically assigned to the CIO on its formation, regardless of the individual circumstances. I hope that that explains the position and I invite the noble Lord to withdraw his amendment.

Lord Hodgson of Astley Abbotts: The Minister said a lot then of a quite high degree of complexity. I am not sure that I followed his parallel with a pre-incorporated company—a commercial company—under the Companies Act. That seems different. A pre-incorporated company is a company that is probably in the process of building itself up. In this case, we are trying to encourage the emergence of CIOs. That means that we are trying to find a facility for charities, where they wish, to move assets into a CIO or put themselves entirely into a CIO. In those cases, we are not dealing with something de novo, but something that may have been around for hundreds of years.
	It makes it much clearer if a charity is to form itself into a CIO that it cannot slough off or remove its liabilities on the way through. That could leave an unhelpful and unsatisfactory situation. I am not sure that the Minister's response has hit the nail on the top of the head, but I will read it carefully and the noble Lord, Lord Phillips, will be able to draw on his extensive charitable experience to tell us whether we have a proper point here. In the mean time, subject to that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts: moved Amendment No. 56:
	Page 106, line 31, at end insert "or at the expiration of six months from receipt by the Charity Commission of the resolution"

Lord Hodgson of Astley Abbotts: This concerns Section 69L of Schedule 6 and remains with the issue of CIOs. This section details the measures that a CIO must undertake when it resolves to transfer all its property, rights and liabilities to another CIO. Subsection (5) explains that such a resolution
	"shall not take effect until confirmed by the Commission".
	Amendment 56 adds to that the words,
	"or at the expiration of six months from receipt by the Charity Commission of the resolution".
	This is a straightforward amendment intended to prevent unnecessary delays by the commission. The commission's powers and responsibilities have been significantly increased by the provisions of the Bill, as we have said many times. The amendment imposes a very generous time-frame in which the commission must opine. The commission should be open to the levels of transparency and accountability to which other regulatory bodies adhere. No one can argue that this is an unreasonable imposition on the Commission, it is merely a safeguard to ensure that charity law operates reasonably expeditiously and to ensure that all CIOs are treated in a fair and balanced manner.
	Administrative delay by the Charity Commission could undermine an appropriate transfer and this safeguard allowing for the transfer to proceed after a specified time is desirable. I beg to move.

Lord Bassam of Brighton: The amendment would provide a deemed confirmation regime if the commission fails or refuses to confirm the resolution within the stated period of six months. The amendment will not work as intended. First, its effect would be that even if the commission refused confirmation within the six month period, the resolution would take effect anyway at the end of the period. Secondly, the operation of new section 69L(8) is dependent on confirmation by the commission of the resolution.
	I am confident that in most cases the commission could confirm such a resolution within a six-month period, but undoubtedly there will be cases with complex circumstances where it would not be possible for it to meet the deadline. The issues that arise in a transfer of undertakings under new Section 69L may be complex and require considerable discussion, and it would be wrong to tie the commission to a completion date of six months regardless of the circumstances. The risk of imposing such a deadline on the commission is that in complex cases it would be forced into the position of refusing to confirm a resolution once the deadline approached, if by that time it had been unable to resolve all the issues satisfactorily.
	That said, I have some sympathy with the noble Lord's intention and am agreeable to considering it further. We would want to provide the commission with the ability to extend such a deadline where it had reasonable grounds to do so; for example, in complex cases where further discussions would be required. So if the noble Lord is happy with that commitment on my part, I invite him to withdraw his amendment.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister for that. I accept that the drafting was defective and needs to be smartened up. Perhaps he can find a way to deal with it. I have no wish unreasonably to tie the hands of the Charity Commission; we just do not want things to get very slack. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Crawley: This may be an appropriate moment to move that the Committee be adjourned until 8 pm.

Moved accordingly, and, on Question, Motion agreed to.
	[The Sitting was suspended from 7.31 pm to 8 pm]

Lord Bassam of Brighton: moved Amendment No. 57:
	Page 108, line 25, leave out from "After" to second "Schedule" and insert "the Schedule 5ZA inserted in the 1993 Act by Schedule (Group accounts) to this Act, insert the following"
	On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendment No. 58:
	Page 113, line 27, leave out "gross income or total expenditure of the charity" and insert "charity's gross income"

Lord Bassam of Brighton: This amendment was wrongly grouped with the earlier grouping. At that point, I said that I would speak to it briefly. Amendment No. 58 modifies the provisions of the 1993 Act requiring a charity set up as a CIO to submit an annual report. Currently, the financial threshold separating charities that have to submit annual reports from those that do not has both an income and an expenditure test, which is the key point. Elsewhere in charity law, there are thresholds that, like this one, have both an income and an expenditure test. For example, the audit threshold requires a charity to have its accounts audited if either its income or its expenditure is above the prescribed level.
	To simplify audit thresholds, we decided to do away with expenditure tests so that, once the Bill was enacted, a charity's expenditure would be irrelevant to decisions on whether its accounts were to be audited. On balance, we think that it is sensible to carry that simplification through to other thresholds that have both an income and an expenditure test. The amendment, therefore, abolishes the expenditure test in the annual report threshold as it applies to charities set up as CIOs.
	Amendments Nos. 75 and 76 were also wrongly included in the earlier group and make similar provision for charities generally. I hope that that clears up that slight mystery. I beg to move.

On Question, amendment agreed to.
	Schedule 6, as amended, agreed to.
	Clauses 33 to 37 agreed to.
	Clause 38 [Power to transfer all property]:

Lord Hodgson of Astley Abbotts: had given notice of his intention to move Amendment No. 59:
	Page 37, line 31, after "charity" insert "or charities"

Lord Hodgson of Astley Abbotts: Amendments Nos. 59 and 60 concern Clause 38 and the power to transfer the property of unincorporated charities. The clause enables an unincorporated charity with a gross income below £10,000 to transfer its capital to another charity when winding up. In addition, under Clause 38, new Section 74(4)(b) stipulates that trustees must be satisfied,
	"that the purposes of any charity to which property is to be transferred under the resolution are wide enough to encompass the purposes of the transferor charity".
	The amendment proposes a provision to amend what we consider to be an oversight in the drafting of this part of the Bill that the Charity Law Association has brought to our attention. It relates to a situation where a small charity may seek to wind itself up by transferring its capital to another charity.
	As drafted, the clause would preclude a situation where a charity which has two distinct objects wishes to divide its assets and transfer them to two charities, each of which has objects encompassing one of the transferor charity's objects, but neither has one that covers both. Our amendment intends to permit such dual transfers.
	I referred to that during the first Committee stage:
	"It is unnecessarily restrictive to say that when you wind up you must send all those assets to a charity, as opposed to charities, as that might much more easily reflect the original objectives of the charity, rather than requiring a single transferee on all occasions".—[Official Report, 16/3/05; col. GC 526.]
	In fact, in accordance with subsection (4)(a), it might often be expedient in the interests of furthering the purposes for which the property is held by the transferor charity if there were to be a number of transferees.
	The noble Lord, Lord Bassam, explained his aversion to the amendment in the first Committee stage:
	"What we are keen to avoid here is creating a situation in which rogue trustees find a way round in transferring from a charity that they want to close down and putting assets into a number of charities, so that one of those charities gets the majority of the benefit but does not conform with the spirit of the original charity".—[Official Report, 16/3/05; col. GC 526.]
	It must be pointed out that there is as much obligation on the transferee charity to conform to the spirit of the transferor charity whether the transferee is one charity, as presently provided in the Bill, or several. The amendment would not change the obligation on the recipient charity to preserve the spirit of the original charity.
	We could take the example of a charity whose purposes were the relief of poverty. If the division of assets is calculated with reference to the width of the transferee's purposes, I do not see how transferring assets to a number of charities would prevent the trustees from maintaining the spirit of the original charity.
	A better or perhaps a more realistic example was helpfully given to us by Farrer & Co. It will also help to demonstrate another problem with the Bill that the amendment would fix. A small charity wishing to make use of the transfer provisions may well, under the current drafting, be unable to do so, as it may struggle to find a single charity whose objects encompass all of its own objects. Although charities with such simple objects as the relief of poverty exist—

Lord Bassam of Brighton: I can see that the noble Lord is in full flow, but I have heard enough. I am more than happy to say that while we had some objections to the amendment at the earlier stage, we were not entirely averse to the general spirit behind it. So in the interests of moving on we would be more than happy to take away his point and consider it. The current drafting does not quite achieve what the noble Lord is seeking, but that said, we see the good intention behind it. We are happy to work on the amendment so as to satisfy the noble Lord on this matter.

Lord Hodgson of Astley Abbotts: That is indeed a handsome offer and I am extremely grateful to the Minister. I was on the point of telling him all about Aberconwy, but in the circumstances I shall desist.

[Amendment No. 59 not moved.]
	[Amendment No. 60 not moved.]
	Clause 38 agreed to.
	Clauses 39 to 41 agreed to.
	Clause 42 [Merger of charities]:

Lord Hodgson of Astley Abbotts: moved Amendment No. 61:
	Page 46, line 20, at end insert—
	"save that the requirement for a transferor charity to cease to exist shall not apply where that transferor charity holds property subject to permanent endowment trusts"

Lord Hodgson of Astley Abbotts: This amendment follows other amendments concerning the issue of merger provisions and permanent endowment trusts. Again, we are grateful to the Charity Law Association for its thoughts on the matter. Under the present drafting, charities will be able to make use of the new statutory merger provisions only in circumstances in which all the transferor charities cease to exist.
	In Committee last time, we tabled an amendment to remove the requirement that to use the new merger provisions, the transferor or transferors must cease to exist. We pointed out a number of instances in which it may be necessary to keep a transferor in existence. We accept the point made by the Minister that opening the merger provisions to all types of partial merger could muddy the waters. However, in the case of a transferee with permanent endowment, it is impossible for the transferor charity to cease to exist.
	When the point was discussed in Committee on the previous occasion, the noble Lord, Lord Bassam, stated that the Charity Law Association's point was,
	"misconceived, because if permanent endowment was involved, the transferee would simply become the trustee of the permanent endowment trust, and the transferor could be removed from the register".—[Official Report, 16/3/05; col. GC 540.]
	Unfortunately, those comments do not describe the legal reality. The "permanent endowment trust", of which on merger the transferee becomes trustee, is the transferor.
	As currently drafted, these provisions will exclude charities with permanent endowment which wish to merge. While recognising that it may be inappropriate to make the merger provisions available in all circumstances where transferors continue to exist, it seems equally inappropriate to us to exclude those cases where it is impossible for the transferor to cease to exist unless it can successfully make use of the provisions in Clause 41.
	Given that the reason for rejecting this aspect of our argument last time was based on what we now consider was a misunderstanding of the legal technicalities, I hope that the Government will reconsider their position. I beg to move.

Lord Bassam of Brighton: When we debated this on the previous occasion, I said that the noble Lord's point relating to mergers was misconceived because if permanent endowment was involved, the transferee would simply become the trustee of the permanent endowment trust and the transferor could be removed from the register. So the transferor would cease to exist and therefore the merger provisions in the Bill would thus be open to it.
	Having given further thought to the issue, I can see the noble Lord's argument that for the purposes of this discussion, a permanently endowed charity cannot "cease to exist". But I still do not think that there is any need to amend the Bill. If the endowed charity has not ceased to exist, it will not need to use the gift protection provisions in Section 75E. A change in the administration of a permanently endowed charity will not affect its right to receive a subsequent gift in augmentation of the endowment, and here I refer noble Lords to the case of Re Faraker in 1912. The provisions in new Section 75E are designed to protect the interests of unendowed charities in gifts which take effect after they have ceased to exist as the consequence of a merger with another charity.
	In the case of a permanently endowed charity, a merger is simply a change in its administration. In this context, provisions relating to re-vesting of property already exist in Section 40 of the Trustee Act 1925 and Section 83 of the Charities Act 1993. Again, the purpose of the vesting declaration provision in new Section 75D is to extend the scope of the provisions which already apply when new trustees are appointed, to the situation where the re-vesting is required, not as the result of a change in trusteeship, but as the result of the transferor charity ceasing to exist as the consequence of a merger. Again the provision can have no application to permanently endowed charities.
	The kernel of our argument is simply this: it is inappropriate and unnecessary for Clause 42 to apply to permanently endowed charities. We therefore do not consider it necessary to amend the Bill.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister for that uncompromising response. He brought up some heavy artillery with the cases from 1912. I shall read carefully what he said. I shall not attempt to answer a fairly technical legal point on the fly. When I have read his response and consulted upon it, I may wish to return to the issue again. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury: moved Amendment No. 62:
	Page 46, line 32, at end insert—
	"( ) Where the statement in subsection (6) is false or the arrangements are not appropriate, the charity trustees of the charity concerned shall be jointly and severally liable for the discharge of such liabilities."

Lord Phillips of Sudbury: This amendment was debated at some length in Grand Committee on the previous occasion.
	The merger provisions set out in Clause 42 of the Bill have the effect of introducing into the 1993 Act proposed new Sections 75C, 75D and 75E. This will bring into existence a radical arrangement whereby the property of merging charities can be vested in the charity receiving the merged assets, automatically and by operation of law, as long as the provisions of proposed new Sections 75C and 75D are complied with. In a nutshell, this radical effect will be achieved by a pre-merger declaration being made by the relevant charities. As long as they comply with the two proposed new sections, there will be an automatic vesting of the legal title, by operation of law, in the charity which is to continue in existence or in the new charity into which the merging charities decide to direct their assets.
	The Government responded to the anxiety that I expressed at an earlier stage about the liabilities of the merging charities by kindly introducing into proposed new Section 75C, at subsection (6)(b), a requirement that when notifying the relevant charity merger there must be included,
	"a statement that appropriate arrangements have been made with respect to the discharge of any liabilities of the transferor charity or charities".
	Amendment No. 62 seeks to add a new subsection, which picks up on those two provisions. It states:
	"Where the statement in subsection (6) is false or the arrangements are not appropriate, the charity trustees of the charity concerned shall be jointly and severally liable for the discharge of such liabilities".
	The need for this is common-sense because otherwise, in the case of corporate charities, creditors who were left in the lurch would be faced with what can only be described as an assault course in trying to get back their entitlements. They would be in the position of having to ask for the corporate charity, the affairs of which had been wound up, to be reinstated. They would then have to trace the assets and the former directors to see whether there was a prospect of recovering their entitlements. Where the merging charitable organisations are non-corporation trusts, the trustees remain jointly and severally liable by dint of trust law.
	The spirit of my amendment is incorporated in the Bill where there is a conversion of a charitable company or an industrial provident society into a CIO. Proposed new Section 69I(9) specifically states:
	"in particular, any liability to which the company or registered society was subject by virtue of its being a charitable company or registered society",
	shall not be affected by the conversion into the CIO. Similarly, it states that, where CIOs merge, the merger shall be without affect to any pre-existing liability. My amendment is the same in spirit as provisions made as I have indicated.
	The Committee should be particularly sensitive to the prospects of what in Anglo-Saxon is called a "cock-up" in one of the mergers. It is not uncommon for charities to be a little slapdash in record keeping. I do not want to see innocent creditors of corporate charities left without any effective remedy because we have legislated in a way that leaves them with no protection. That is the best that I can do by way of a short explanation of what is quite a complicated amendment. I beg to move.

Lord Hodgson of Astley Abbotts: I have a question relating to the amendment. I understand the need to protect creditors, but the amendment does not differentiate between a trustee who has peripheral and limited knowledge and experience of the operation of the charity and one who is central to it. The operation of joint and several liability would be extremely onerous for somebody who might have only a fairly loose connection with the charity. The answer may be, "Well if you become a trustee, that is tough". However, that could be extremely off-putting for people who are wealthy, because joint and several liability will impinge heavily on them, and will mean that people who might give a little of their time and expertise to a charity might not do so because of the risks that they might run thereby.

Lord Phillips of Sudbury: I am grateful for the question. Of course, if a particular trustee is got at under the provisions—or the existing law, for that matter—he or she has a right to a contribution from the other trustees, equally. That can be of little solace where the other trustees have nothing to contribute. The larger point that the noble Lord makes seems to be answered along the lines of his own answer. One should not go into the business of being a trustee of a charity or a director of a charitable corporation without due regard for the way in which it is run.
	In particular, when one is making use of the provisions, it is a duty on every trustee and director of a corporate charity to ensure that innocent third parties are not prejudiced. The provision will operate only as an encouragement to people to say, "We must be sure before we wind our charity up that we make proper provision for creditors". Equally, when the Act states that,
	"appropriate arrangements have been made",
	a thorough job should jolly well have been done on that. That is a proper stimulus to charities to behave correctly in circumstances where otherwise innocent third parties could be prejudiced.

Lord Bassam of Brighton: I am grateful to the noble Lord, Lord Phillips, for the amendment and his Anglo-Saxon interpretation of why it might be necessary. He recognised that the Government have responded in part to some of his concerns by including in the new Section 75C certain amendments to the 1993 Act via Clause 42 of the Bill, where a new provision exists requiring the Charity Commission to be notified, when one charity is merged with another, of the arrangements that have been made with respect to the discharge of any liabilities of any charity that ceases to exist as a result of the transfer.
	The noble Lord's amendment would supplement the provision by making the charity's trustees "jointly and severally" liable if the terms of the notification are false or the arrangements for the discharge of the liabilities are in the noble Lord's words "inappropriate".
	The effect of the noble Lord's amendment would in practice be confined to corporate charities. That is because the charity trustees of an unincorporated charity are and would remain under the Bill responsible for liabilities that they had incurred on behalf of the charity, if the charity ceased to exist leaving liabilities outstanding. A corporate charity is normally solely responsible for the liabilities that it incurs; its directors are not personally responsible for those liabilities. If such a charity were to be dissolved, leaving liabilities outstanding, the effect of the amendment would therefore be to transfer those liabilities from the defunct charity as a corporate body to the charity's directors.
	At present, outstanding creditors of a dissolved company would, in order to obtain satisfaction of the debts owed to them, need to have the company restored to the companies register with a view to its being wound up; they would not have a direct claim against those who were directors prior to dissolution. That applies to charities as to other companies. The noble Lord may consider that process to be cumbersome, but it is a general requirement under company law, and the Government believe that the issues would need to be examined as part of the wider company law reform discussions that are currently in train. There is, in the Government's view, no reason to single out corporate charities for different treatment.
	It is for that reason that I invite the noble Lord to reconsider his position and understand what we are trying to say by way of explanation. I hope that he will feel able to withdraw his amendment.

Lord Phillips of Sudbury: I am grateful to the Minister. I have considered the matter extremely carefully, but the amendment does not pluck a new obligation out of a clear blue sky and simply fix it to corporate charities. It is a direct response to the fact that this scheme or regime of automatic transfer of legal title in assets of merging charities is a unique one. There are very few examples in English law where, by operation of law, land assets and all forms of assets are automatically transferred from one owner to another. It is in response to that radical provision that I have produced what seems to me a commonsense and fair protection.
	The Government put the requirement into the Bill for producing a statement that appropriate arrangements had been made. If that statement is false, why should the company directors escape liability, given that the assets will have gone off? What conceivable solace is it to an innocent creditor of a charity to have to go and apply to the High Court for restoration of a company to the register of companies as a starter to trying to establish a claim—the assets having gone by automatic operation under the new regime to the new charity?
	I invite the Minister to think afresh about that matter. The answers that he has given, although they are technically impeccable, substantially do not address the occasional and rare evil that I address in the amendment, but at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury: moved Amendment No. 63:
	Page 47, line 26, after "date" insert "(but this provision shall be without prejudice to the efficacy of any commission scheme with regard to such land)"

Lord Phillips of Sudbury: The amendment emanates from the Charity Law Association and, again, deals with the new regime for mergers of charities. I refer once more to the radical vesting of legal title to charities' assets when they have executed the relevant pre-merger vesting declaration and complied with the notification that we have just been discussing. At present, when one charity merges with another and one of them has a large amount of leasehold property—or it might be one of those charities with a lot of urban land, with hundreds of titles—they will get a scheme from the Charity Commission enabling and facilitating the transfer of those leasehold assets into the merged entity.
	When the Government responded, as they kindly did, to concerns expressed about the exceptional circumstances in which we felt that the automatic vesting would be unreasonable, they responded by putting in subsection (3). The three classes of cases in subsection (3) will not be subject to the automatic vesting. One of those cases is where leases or agreements require the consent of someone else before the transfer of the lease or agreement can take place.
	This amendment is slightly in the nature of a probing amendment because it may be that the Government can give an assurance that Amendment No. 63 is unnecessary. If that is not the case then at least Amendment No. 63 will have the effect of making clear that this provision is without prejudice to the present normal course of conduct, whereby a commission's scheme is obtained with regard to such land and its efficacy. I beg to move.

Lord Bassam of Brighton: I am grateful to the noble Lord for his explanation, and I understand that the purpose of the amendment is to make clear that the commission's power to revest the title to leasehold charity property is not limited by the need to obtain the consent of the lessor. This need is a feature, in any event, of the automatic vesting provisions in the new Section 75D of the Charities Act 1993, as inserted by Clause 42 of the Bill.
	There is, however, no such limitation at present in the 1993 Act. The commission already has the power to revest the title to leasehold charity property without the consent of the lessor. So the legal effect of the amendment is effectively negligible, with the potential to create uncertainty. This is because the amendment might be taken to imply that, in the future, a revesting order has to be contained in a scheme, which is not the position at present. It is not really necessary and could confuse the situation. I understand why the noble Lord has tabled it, but he has partly answered the point in his own contribution. I hope that he will feel able to withdraw the amendment.

Lord Phillips of Sudbury: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hodgson of Astley Abbotts: moved Amendment No. 64:
	Page 47, line 29, at end insert "; or
	(d) any contractual or other obligation undertaken by the transferring charity, or owed to it, which is subject to a guarantee of its performance by a third party unless such consent has been obtained before the date on which the transfer would take place."

Lord Hodgson of Astley Abbotts: The noble Lord, Lord Phillips, talked about Clause 75D(3). This amendment is concerned with that subsection and takes us a little further down the same sorts of issues that he raised. Clause 75D contains provisions in subsection (2) for the automatic transfer of property in certain circumstances that excludes certain classes of property from such transfers, as we have just been discussing.
	The Law Society has brought to our attention its concern that the provisions do not include a further category of property where the automatic transfer which would otherwise apply could result in damage to the charity. That is the case of any contractual arrangement, the performance of which is guaranteed by a third party, whether the benefit or the burden of the arrangement is owned by the charity.
	In many cases that would be damaging to the receiving charity because, at the very least, it would be exposed to uncertainty about possible court proceedings for breach. There could well be unnecessary expense incurred in trying to settle the position.
	The transfer of the obligation to a third party without the consent of the guarantor to the change would render the guarantee void and useless. This could have ramifications in the sense that it could render the contract itself void if the contract also required there to be a guarantor. If the guarantee was of a lease, for instance, it could have the effects described above. There are also arguments about whether, in circumstances where the obligation guaranteed is owed by the charity to a third party, such a provision could be said to deprive the third party of property rights in the form of the guarantee, and that it would thus offend against the ECHR.
	We therefore propose that there should be this further category added to the kinds of property excluded from the automatic transfer of property in Clause 75D(3). I beg to move.

Lord Bassam of Brighton: We debated this amendment last time round. I said at that time that we wanted to give further consideration to Amendment No. 180. As the noble Lord will have noticed, we have amended the Bill to take in the first part of Amendment No. 180 but not the second part; that is, the amendment we are now discussing.
	The amendment seeks to add to the list of items in new Section 75D(3) to which the new merger vesting provisions will not apply.
	There are two separate issues which this amendment covers, the first of which is contractual obligations owed by the charity, which are liabilities of the charity, not property. The new merger provisions in new Section 75D(3) apply only to property, so they will not apply to liabilities such as contractual obligations. So the part of this amendment that refers to obligations owed by the charity is not necessary.
	The second issue that the amendment covers relates to the vesting of the rights of the transferor charity in the transferee charity on a merger. Under the Bill as currently drafted, such rights would automatically vest in the transferee charity. For example, if A owes the transferor charity money, on a merger the right to receive payment will automatically vest in the transferee charity. If A's liability is guaranteed by B, the benefit of the guarantee will also vest in the transferee charity.
	The effect of the amendment would be to prevent the vesting of the right of the transferor charity to payment in the transferee charity if A's liability is the subject of a guarantee and B, the guarantor, does not give consent.
	It may be that the noble Lord, Lord Hodgson, does not wish to go so far as this. The purpose may simply be to enable B, the guarantor, to be released from his guarantee, if the benefit of the liability which he has guaranteed is transferred from the transferor charity to the transferee charity without his approval.
	I can see why B might want to terminate a guarantee in those circumstances. In giving the guarantee he might have been concerned very specifically with the interests of the transferor charity, and may have wanted to reinforce that charity's right to receive due payment. He may have no corresponding interest in the transferee charity. But this, in our view, is a point that should be dealt with in the guarantee which is given—it would be possible to stipulate that the guarantor should have the right to terminate the guarantee in the event of the transfer of the relevant right to another charity. We think there is no reason why the Bill should give the guarantor this sort of right if he has not stipulated for it.
	Therefore, we do not think that the amendment is necessary or desirable. I hope that for the reasons I have set out the noble Lord will feel able to withdraw the amendment.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister. It seems to me he is essentially saying he thinks that guarantors would use their position unreasonably to try to frustrate mergers—that may possibly be the case—and that the matter would be better tackled by means of a standard form of contract. No doubt firms such as that of the noble Lord, Lord Phillips, would be glad to help draw up such a standard form of contract.
	It seems to me that one of the dangers is that someone could give a guarantee to a charity, not realising that his guarantee could be transferred to another charity without his knowing about it, or without his consent, in circumstances where he would not wish to give that consent, perhaps because he originally gave the guarantee to a small charity about which he was particularly concerned and which he wanted to prosper. However, when it was going to be merged, he considered that it could stand on its own two feet. That does not seem to me entirely satisfactory. Clearly, the Minister's answer is an answer, but I wonder how many times people will find that their guarantees have been transferred before firms such as that of the noble Lord, Lord Phillips, have produced a standard form on the word processor stating that you must not give a guarantee unless you sign up on that standard form.
	I should like to think further about the matter. However, in the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 42 agreed to.
	Clauses 43 to 72 agreed to.
	Schedule 7 [Minor and consequential amendments]:
	[Amendment No. 65 had been retabled as Amendment No. 73A.]

Lord Bassam of Brighton: moved Amendment No. 66:
	Page 129, line 6, leave out sub-paragraph (2) and insert—
	"( ) For subsection (1) substitute—
	"(1) Any person or body to whom this section applies may disclose information to the Commission if the disclosure is made for the purpose of enabling or assisting the Commission to discharge any of its functions.
	(1A) Subsection (1) above has effect subject to—
	(a) subsection (2) below, and
	(b) any express restriction imposed by or under any other enactment.""

Lord Bassam of Brighton: Amendments Nos. 66 and 67 are essentially technical amendments that relate to Section 10 of the 1993 Act. Section 10(1) of the 1993 Act provides for the disclosure of information to the Charity Commission for the purpose of enabling or assisting the commission to discharge its functions. Under it, a body or person to whom the section applies may disclose to the commission any information received by that body or person under or for the purposes of any enactment.
	Amendment No. 66 amends Section 10(1) of the 1993 Act to remove the requirement for information that had been received under any enactment. It retains the other existing limitations in Section 10(1). Amendment No. 67 removes the specific provision regarding the Attorney-General, as it is no longer required following the general provision made by Amendment No. 66. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendment No. 67:
	Page 129, line 25, leave out sub-paragraph (8).
	On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendments Nos. 68 to 72:
	Page 131, line 29, at end insert—
	"( ) for "a receiver" substitute "an interim manager, who shall act as receiver"."
	Page 132, line 19, leave out sub-paragraph (2) and insert—
	"( ) For subsection (1) substitute—
	"(1) The Commission may under section 18(1)(vii) above appoint to be interim manager in respect of a charity such person (other than a member of its staff) as it thinks fit.""
	Page 132, line 24, at end insert "and
	( ) for "receiver and manager" substitute "interim manager".
	( ) In subsection (3) for "receiver and manager" (in both places) substitute "interim manager".
	( ) In subsection (4)—
	( ) for "receiver and manager" substitute "interim manager", and
	( ) for "the Commissioners" substitute "the Commission"."
	Page 132, line 25, leave out "(4)(b),"
	Page 132, line 26, at end insert—
	"( ) In the sidenote for "receiver and manager" substitute "interim manager"."
	On Question, amendments agreed to.

Lord Tordoff: If Amendment No. 73 is agreed to, I cannot call Amendment No. 73A, for reason of pre-emption.

Lord Bassam of Brighton: moved Amendment No. 73:
	Page 136, leave out line 10 and insert—
	"(1) Section 42 (annual statements of accounts) is amended as follows.
	(2) After subsection (2) insert—"
	On Question, amendment agreed to.
	[Amendment No. 73A not moved.]

Lord Bassam of Brighton: moved Amendments Nos. 74 to 76:
	Page 136, line 19, at end insert—
	"(3) After subsection (7) add—
	"(8) Provisions about the preparation of accounts in respect of groups consisting of certain charities and their subsidiary undertakings, and about other matters relating to such groups, are contained in Schedule 5ZA to this Act (see section 49A below).""
	Page 137, line 32, after "(3)" insert—
	"(a) for the words from "in any" to "expenditure" substitute "a charity's gross income in any financial year", and
	(b) "
	Page 137, line 34, at end insert—
	"( ) for the words from "in any" to "exceeds" substitute "a charity's gross income in any financial year does not exceed","
	On Question, amendments agreed to.

Lord Bassam of Brighton: moved Amendment No. 77:
	Page 138, leave out lines 6 to 12 and insert—
	""(3) Except in accordance with subsections (3A) and (3B) below, nothing in section 43, 44, 44A or 45 applies to any charity which—
	(a) falls within section 3A(2)(d) above (whether or not it also falls within section 3A(2)(b) or (c)), and
	(b) is not registered.
	(3A) Section 44A above applies in accordance with subsections (2A) and (2B) above to a charity mentioned in subsection (3) above which is also an exempt charity.
	(3B) Sections 44 and 44A above apply to a charity mentioned in subsection (3) above which is also an English National Health Service charity or a Welsh National Health Service charity (as defined in sections 43A and 43B above).""

Lord Bassam of Brighton: The amendment stands in the name of the noble Baroness, Lady Scotland. Section 46 of the Charities Act covers accounting and reporting by exempt and excepted charities. In particular, it specifies what elements of the general accounting framework set out in Sections 41 to 45 of the 1993 Act as augmented by the Bill apply to exempt and excepted charities.
	We had to make some changes to Section 46 of the Act through paragraph 133 of Schedule 7 to accommodate any small English or Welsh NHS charities that were below the registration threshold. There were some other permutations that we did not deal with the first time around and which the amendments are designed to deal with now, for example, to ensure that the new auditors' whistle blowing duty applies to very small exempt charities.
	The amendments are difficult to understand in isolation, and I shall happily write to any noble Lord who has a more detailed question about their effect. They are essentially a benign, tidying-up exercise.

On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendments Nos. 78 and 79:
	Page 138, leave out line 15 and insert—
	"( ) falls within section 3A(2)(b) or (c) above but does not fall within section 3A(2)(d), and"
	Page 138, line 24, leave out sub-paragraph (7) and insert—
	"( ) Omit subsection (8)."
	On Question, amendments agreed to.

Lord Bassam of Brighton: moved Amendment No. 80:
	Page 138, leave out line 27 and insert—
	"(1) Section 47 (public inspection of annual reports etc.) is amended as follows.
	(2) In subsection (1)—"

Lord Bassam of Brighton: in moving Amendment No. 80, I shall speak also to Amendment No. 81. Section 47(2) of the Charities Act 1993 gives any member of the public a right to require a charity to send him or her a copy of its latest accounts. That seems sensible to me. Not long ago, Mr Alan Mears of High Wycombe wrote to the Bill manager in the Home Office, suggesting that it was an anomaly that ought to be remedied by the Bill and that the right was confined to the charity's accounts and did not extend to the annual report.
	I agree with Mr Mears that there should be a public right to a copy of a charity's latest annual report, as well as its latest accounts. I congratulate him on pointing this out to us. These amendments, the Mears amendments, correct the anomaly he identified. Three cheers to Mr Mears. I beg to move.

Lord Phillips of Sudbury: A Mears amendment, but no mere amendment. Have the Government any idea how much the existing entitlement of the public to have access to accounts is used?

Lord Bassam of Brighton: No, but I suspect probably not frequently. Nevertheless, it is an important right.

Lord Phillips of Sudbury: Is it a right that can be exercised exclusively at the expense of the charity of which the request is made, for postage and copying charges?

Lord Bassam of Brighton: I do not know the answer to that. However, I do not think the provision is unreasonable in the circumstances. The noble Lord will accept that charities dispense many services, and account for large expenditures of public funds. This is a useful protection, and it is right we give some effect to it.

Lord Phillips of Sudbury: Sorry to persist, but can this right be met by a charity having a website on which the accounts and annual report is shown? I am just thinking of small charities and the cost of physically responding by post. I am not objecting.

Lord Bassam of Brighton: I can see what the noble Lord is getting at. It is one of those things where we need a sense of balance and proportion. The noble Lord has probably got it right. Perhaps most people will be satisfied in any event by being able to access a fairly low-cost website.

On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendment No. 81:
	Page 138, line 31, at end insert—
	"(3) In subsection (2)(a) after "accounts" insert "or (if subsection (4) below applies) of its most recent annual report".
	(4) After subsection (3) add—
	"(4) This subsection applies if an annual report has been prepared in respect of any financial year of a charity in pursuance of section 45(1) or 46(5) above.
	(5) In subsection (2) above the reference to a charity's most recent annual report is a reference to the annual report prepared in pursuance of section 45(1) or 46(5) in respect of the last financial year of the charity in respect of which an annual report has been so prepared.""
	On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendment No. 82:
	Page 138, line 33, at end insert—
	"( ) In subsection (1A) for the words from "neither" to "exceeds" substitute "the charity's gross income does not exceed"."

Lord Bassam of Brighton: Section 48(1) of the 1993 Act requires every registered charity to prepare an annual return in the form prescribed by the commission, subject to subsection (1)(a). That subsection disapplies this general requirement for any charity which has an annual income and an annual expenditure of less than £10,000.
	As the noble Lord, Lord Hodgson, knows, there are thresholds elsewhere in charity law that, much like this one, have tests for both income and expenditure. The audit threshold, for example, currently requires a charity to have its accounts audited if either its income or expenditure is above the prescribed level. To simplify the audit threshold, we decided to do away with the expenditure test. Once the Bill is enacted, the amount of a charity's expenditure will be irrelevant for the purposes of deciding whether or not its accounts are to be audited.
	We think it sensible to carry this simplification through to other thresholds that have both an income test and an expenditure test. This amendment therefore abolishes the expenditure test in the annual return threshold in Section 48 of the 1993 Act. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendment No. 83:
	Page 143, line 21, at end insert—
	"( ) In subsection (4) after "above" insert "or Schedule 5ZA,".
	On Question, amendment agreed to.
	Schedule 7, as amended, agreed to.
	Schedule 8 [Repeals]:

Lord Bassam of Brighton: moved Amendment No. 84:
	Page 150, line 43, at end insert—
	
		
			  
			  "Section 46(8)." 
		
	
	On Question, amendment agreed to.
	Schedule 8, as amended, agreed to.
	Schedule 9 [Transitional provisions and savings]:

Lord Bassam of Brighton: moved Amendment No. 85:
	Page 153, line 24, at end insert—
	:TITLE3:"Schedule (Group accounts): group accounts
	Paragraph 2(2) of the new Schedule 5ZA inserted in the 1993 Act by Schedule (Group accounts) to this Act does not apply in relation to any financial year of a parent charity beginning before the day on which paragraph 2(2) comes into force."
	On Question, amendment agreed to.
	Schedule 9, as amended, agreed to.
	Clause 73 agreed to.
	Clause 74 [Interpretation]:

Lord Bassam of Brighton: moved Amendment No. 86:
	Page 74, leave out lines 22 and 23 and insert—
	"( ) "charity" has the meaning given by section 1(1);
	( ) "charitable purposes" has (in accordance with section 2(5A)) the meaning given by section 2(1); and"
	On Question, amendment agreed to.
	Clause 74, as amended, agreed to.
	Clauses 75 and 76 agreed to.
	House resumed: Bill reported with amendments.
	House adjourned at nine minutes before nine o'clock.